IRS grants relief by announcing a two-year extension of the SECURE 2.0 Roth catch-up requirement

What's happening
On August 25, 2023, the Internal Revenue Service announced an administrative transition period for the first two taxable years of the SECURE 2.0 Section 603 requirement that all participants whose FICA earnings exceed $145,000 in the prior year must make age 50 catch-up contributions as Roth. Plans will now have through December 31, 2025 to comply with the regulation.
 
What should you do now?
By December 31, 2025, if you do not offer Roth deferrals and would like to offer age 50 catch-up contributions to all participants, you will need to add Roth. We suggest that you consult with your legal counsel to determine the plan design that will be best for your plan and participants.
 
You may also review the decision-tree document below to consider what steps you'll need to take in the future.

Current plan design
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Required action needed from plan
You will need to track FICA wages and provide this information to your recordkeeper or third party administrator (TPA) to comply with the new provision before January 1, 2026. We also recommend that you communicate to your participants exceeding $145,000 in FICA wages in the prior calendar year that, starting in 2026, their age 50 catch-up contributions will be made as Roth.
Required action needed from plan
If you choose to offer age 50 catch-up, these contributions will need to be made as Roth for participants exceeding $145,000 in FICA wages with the employer in the prior calendar year, starting on January 1, 2026. You will also need to track FICA wages and provide this information to your recordkeeper or third party administrator (TPA) to comply with the new provision before 2026.
Required action needed from plan
You will need to adjust your plan design to include Roth deferrals before January 1, 2026. For participants exceeding $145,000 in FICA wages with the employer in the prior calendar year, starting in 2026, their age 50 catch-up contributions will need to be made as Roth.
You will also need to track FICA wages and provide this information to your recordkeeper or third party administrator (TPA) to comply with the new provision before 2026.
Required action needed from plan
You do not need to make any plan changes to comply with the new provision in 2026. Make note of the requirements that will take place on January 1, 2026 and know that if you plan to add age 50 catch-up, you will also need to add Roth and track FICA wages so you can provide this information to your recordkeeper or third party administrator (TPA) to comply with the provision.

Please note, this decision tree involves plan design changes and/or amendments, and we suggest that you consult with your legal counsel.