IRS Issues Much Anticipated Guidance On Catch-Up Contributions

On January 10, 2025, the Department of the Treasury ("Treasury") and the Internal Revenue Service ("IRS") issued proposed regulations regarding the provisions of the SECURE 2.0 Act of 2022 ("SECURE 2.0") that relate to catch-up contributions. The proposed regulations provide helpful and eagerly awaited guidance on a number of issues we have been working with clients to address but demonstrate the complexity of implementing these changes.

The proposed regulations focus on the requirement imposed by Section 603 of SECURE 2.0 that catch-up contributions for higher income participants in Section 401(k), 403(b), and governmental 457(b) plans be designated as Roth contributions (the "mandatory Roth catch-up" provision). They also touch on the optional design change under Section 109 of SECURE 2.0 that permits eligible catch-up participants attaining age 60 through 63 during a calendar year to make "super catch-ups", a higher dollar amount of catch-up contributions for