IRS delays ROTH requirement for higher-paid employees’ catch-up contributions

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Legislation enacted in December 2022 requires that certain higher-paid employees make their “catch-up” retirement plan contributions on a ROTH basis, and that the ROTH option be made available to all participants age 50 or older.

In a new notice, the IRS has now given employers and service providers until 2026 to implement the change, rather than the initially planned 2024. Read on for details, including anticipated additional guidance.


A participant in a Section 401(k) plan, a Section 403(b) plan, or a governmental Section 457(b) plan who has attained the age of 50 can make a special “catch-up” election to contribute an additional amount to the plan for the year, above the usual annual limitation applicable to the elective compensation deferral contributions of younger plan participants. For example, for 2023, the regular elective deferral limit is $22,500, and the catch-up contribution amount is $7,500.

The SECURE Act 2.0, enacted in December 2022, includes a provision requiring that employees who for the immediately preceding year had more than $145,000  of FICA wages from the employer maintaining the plan (subject to future COLA increases) must elect to make those contributions on a ROTH basis – i.e., the compensation contributed under the plan would be taxable up front, but any earnings generated thereby would be tax-free. 

In addition, a plan must make catch-up contributions on a ROTH basis available to all participants age 50 or older, even if they do not earn enough to be subject to the above requirement, to provide them with the choice between ROTH and non-ROTH catch-up contributions. 

Under the Act, the ROTH Catch-Up Requirement is to go into effect as of 2024. Considering the many administrative aspects that employers, eligible employees, and retirement plan service providers faced in addressing the new requirement, and on account of a lack of IRS guidance, representatives of the retirement plan industry have been asking the IRS to take formal action to delay implementation.

IRS delays implementation, promises additional guidance

In their recently issued Notice 2023-62, “Guidance on Section 603 of the SECURE Act 2.0 with Respect to Catch-Up Contributions,” the IRS announced that implementation of the ROTH Catch-Up Requirement would be delayed until 2026, with 2024 and 2025 constituting an “administrative transition period” for this purpose.

In the Notice, the IRS also advises that additional guidance will be provided. This is expected to include: 

  • The ROTH Catch-Up Requirement will not be applicable to an age 50-or-older plan participant who did not have any FICA wages for the immediately preceding year from the employer that sponsors the plan.
  • The employer and administrator of the plan will be permitted to treat a 50-or-older plan participant’s pre-tax compensation deferral election as a ROTH election as necessary to satisfy the ROTH Catch-Up Requirement.
  • Future guidance will clarify how the ROTH Catch-Up Requirement will apply to a plan maintained by more than one employer, including a union-sponsored multi-employer plan. 

What does CohnReznick think?

The Notice provides a welcome and sorely needed reprieve from the commencement of the applicability of the ROTH Catch-Up Requirement. We will continue to monitor for the anticipated additional IRS guidance.


Dana S. Fried, JD, LLM, Managing Director, National Tax Services



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Dana Fried

JD, LLM, Managing Director - National Tax Services

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