Treasury, IRS Issue Final Regulations on Roth Catch‑Up Rule & SECURE 2.0

Treasury, IRS Issue Final Regulations on Roth Catch‑Up Rule & SECURE 2.0Core Regulation:Employees age 50+ can make catch‑up contributions to workplace retirement plans (e.g., 401(k), SIMPLE IRA).Under SECURE 2.0, high‑income earners (with wages above certain thresholds) must make these catch‑ups as after‑tax Roth contributions.Key Updates in Final Regulations:Aggregation of wages: Plan administrators can aggregate an employee’s wages from certain separate common‑law employers when determining Roth catch‑up applicability.Corrections allowed: Rules for fixing failures to follow Roth catch‑up requirements.Deemed Roth elections clarified.Puerto Rico coverage: Adjustments for plans covering Puerto Rico participants.Other Provisions:Higher catch‑up contribution limits apply to those aged 60‑63 and for employees in new SIMPLE plans.Effective Dates:Roth catch‑up requirement applies starting in 2027.Governmental / collectively bargained plans → may start later.Plans can adopt earlier, before 2027, if using a reasonable, good‑faith interpretation of the statute.Transition relief (Notice 2023‑62) remains unchanged → expires Dec. 31, 2025.Big Picture:Aims to modernize retirement savings by shifting higher‑income workers into Roth (after‑tax) catch‑ups.Provides more clarity for plan sponsors and administrators as they prepare systems and communications before 2027.