More than 100 organizations penned a letter to the House Ways & Means Committee last week requesting additional time for Section 603 of SECURE 2.0—otherwise known as the Roth catch-up contribution provision.
Effective in 2024, the provision would require earners making over $145,000 to add catch-up contributions on a Roth basis.
Written by the American Benefits Council, and with signatories from the American Retirement Association, Charles Schwab, Groom Law Group, and more, the letter requests the committee delay the provision by two years, on top of “any time necessary to give state and local governments the opportunity to consider and enact needed legislation, and any additional time to avoid requiring changes during the term of a collective bargaining agreement or other applicable binding agreements.”
Organizations are also asking Congress to pass legislation providing relief, and as quickly as possible.
The letter stressed that if transition relief isn’t granted by the summer, plans and employers will unlikely be able to comply with the provisions. Ultimately, if the requirement is not delayed, for many of these plans, “their only means of compliance will be to eliminate all catch-up contributions for 2024.”
If the committee delays until the fourth quarter to announce an extension, plans may still be unable to comply with the requirement since compliance and payroll systems must be designed “well before” its effective date, noted organizations in the letter.
“Obviously, any new rule requires new administrative work to implement,” reads the letter. “But we have been struck by the overwhelming input from the retirement community that this particular task simply cannot be done in time by a vast number of plans.”
If Congress does not act, organizations call on the U.S. Department of Treasury, along with the Internal Revenue Service (IRS) to unilaterally provide relief. “For example, the issue could be addressed simply by an announcement that the IRS will not seek taxes, interest, penalties or any other sanctions from any party by reason of noncompliance with the new Roth catch-up contribution rule prior to January 1, 2026,” noted the letter. “There are many precedents for such action.”
SEE ALSO:
- Glitch-Fixing: How 2024 Catch-Up Contributions Could Be Restored in SECURE 2.0
- SECURE 2.0 Technical Corrections Legislation Coming Soon
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
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