The National Association of Government Defined Contribution Administrators (NAGDCA) this week released its third letter asking the Treasury Department and the Internal Revenue Service (IRS) to delay a SECURE 2.0 provision on Roth catch-up contributions.
The note follows a March 2023 letter from the organization, in which it requested additional timing for government plans implementing section 603(b)(1) and (2) of SECURE 2.0, otherwise known as a provision that would require for all catch-up contributions from employees ages 50 and older and who earned $145,000 in the previous year to be made on a Roth basis.
In its letter, NAGDCA notes how other plan types had received extra time to implement the provision.
“In the proposed regulation issued on January 13, 2025, collectively bargained plans were given additional implementation time. We respectfully request that governmental plans receive the same extension.”
It notes how governmental plans “often face complexities in local law enabling requirements, payroll systems, and administration that most private sector employers do not,” and therefore should be offered the additional timing. NAGDCA also adds that most governmental plans have been waiting on final regulations not yet issued by these agencies before incorporating the provision to their plans.
Section 603 under SECURE 2.0 was initially set to become effective in 2024. However, the IRS announced a two-year delay in August 2023 after receiving multiple calls from industry groups urging for an extension. The IRS’ notice had also corrected a technical error that would have removed all catch-up contributions beginning in 2024.
The Department of Treasury and the IRS would release further proposals in January 2025, in which it said it would no longer allow employers to require that participants make Roth catch-up contributions in order to streamline plan administration. Under the proposed regulation, plan participants who earn $145,000 or less must still be allowed to make traditional catch-up contributions.
SEE ALSO:
SECURE 2.0 Roth Catch-Up Delay: More IRS Guidance to Come
IRS, Treasury Department Release Proposals on Catch-Up Contributions and Auto Enroll
IRS Comes Through with Roth Catch-Up Contribution Deadline Extension