The SECURE 2.0 Act made significant changes to retirement plan rules, including new requirements for catch-up contributions. The IRS has now issued final regulations clarifying two key changes.
Required Roth Contributions for High Earners
Participants who earned more than $145,000 in FICA wages from the employer in the prior year must make all catch-up contributions on a Roth basis. This threshold is indexed annually.
Increased Limits for Ages 60-63
Participants aged 60 through 63 can contribute the greater of $10,000 or 150% of the regular catch-up limit for the year. This enhanced limit applies only during the applicable years.
Timing
The increased catch-up limit becomes effective in 2025. The Roth requirement for high earners takes effect for taxable years beginning after December 31, 2026, with full compliance required in 2027.
Preparing for Compliance
Plan sponsors should review payroll and recordkeeping systems, communicate changes to participants, and document compliance processes during the transition period.
