As explained in our previous blog, “Get Caught Up With Catch-Up”, earlier this year the SECURE 2.0 Act mandated that starting in 2024 participants earning above $145,000 of compensation will be required to make their catch-up contributions on a Roth basis. However, on August 25, 2023, the Internal Revenue Service (IRS) announced an administrative transition period that delays the requirement for participants to “Rothify” their catch-up contributions until at least 2026.
This transition period provides time for plan sponsors, recordkeepers, and payroll companies to receive additional guidance on how to adapt their current procedures in order to stay compliant with anticipated mandates and in turn, better benefit participants.
At a participant level, these updates are important for individuals aged 50 and above who are considering making catch-up contributions to their retirement plans. Furthermore, the IRS has clarified that participants ages 50 and above can continue making traditional catch-up contributions after 2023, regardless of income level.
At My Benefits, we believe it is of utmost importance to understand and stay up to date with the latest legislation changes so that our business owner clients remain compliant and their participants can take advantage of all available options when saving for retirement.
We stand ready to assist in your review to make any recommendations needed in accommodating these new mandates to meet your individual objectives. Should it be determined plan amendments are needed, our dedicated team will be eager to assist and “bring it all together for you”.
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