Relief is here for 401(k) plan sponsors, participants and administrators. The SECURE 2.0 Act initially stated that employees aged 50 and older who earned $145,000 or more in 2023 could only make catch-up contributions to Roth 401(k) accounts in 2024 and later. However, IRS Notice 2023-63 postpones the new catch-up contribution rule for two years until January 1, 2026.
A GLITCH FIXED
The notice also fixed a glitch in the law that inadvertently deleted part of the tax code, so it reads as if the ability for any employees to make catch-up contributions is eliminated beginning in 2024. The IRS says it will allow these catch-up contributions to be made, even though Congress did not fix this error in the law.
MORE TO COME
The IRS expects to provide future guidance saying that the mandatory Roth 401(k) catch-up provision does not apply to high-paid self-employed persons who have self-employment income instead of W-4 wages.