Administrators of plans offering catch-up contributions can now breathe easier, thanks to the Internal Revenue Service (IRS). In a noteworthy step, the IRS issued Notice 2023-62 on August 25, which essentially postpones the enforcement of a specific provision under the Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act.
The provision in question under the SECURE 2.0 Act would have necessitated the catch-up contributions made by high-earners to be managed as Roth contributions. However, with the newly announced relief, this stipulation’s operational date has been put on hold. While the SECURE 2.0 Act aims to significantly overhaul retirement security in the United States, its particular provision regarding catch-up contributions had been a cause of concern for administrators and high-earning contributors alike.
The implementation delay offered by notice 2023-62 signifies a significant relief, especially given the high-level complexities associated with overseeing catch-up contributions as Roth contributions. The IRS’ decision not only addresses these operational concerns but also provides sufficient time for a smoother transition, thereby smoothening the potentially disruptive effects on retirement plans.
For more details on the notice and its implications, legal professionals and plan administrators can read the full text at JDSupra.