In an effort to provide clarity and relief for plan sponsors, the Internal Revenue Service (IRS) has recently issued Notice 2023-62, offering guidelines on the demands of Section 603 of the SECURE Act 2.0 of 2022. This focuses primarily on catch-up contributions, made particularly pertinent for certain highly compensated individuals.
Specifically, Section 603 has demanded that catch-up contributions for these individuals must proceed on a Roth basis, to take effect from January 1, 2024.
This significant directive, composed by Ogletree, Deakins, Nash, Smoak & Stewart, brings a measure of respite to plan sponsors who, prior to this, may have been working in a space of uncertainty and conjecture. In light of these latest guidelines, sponsors can now hope to effectively engage with the demands of the SECURE Act 2.0, especially with respect to facilitating Roth catch-up contributions for highly recompensed personnel.
While there is a level of relief attached to this updated provision, recipients will of course have to wait until the turn of 2024 to benefit from the stipulations laid out within Section 603. This delayed implementation has been designed to afford sponsors an ample time frame in which to adapt to these fresh rulings, thereby ensuring that the transition – particularly for the affected highly compensated individuals – will be as smooth and painless as possible.