August 30, 2023


IRS Delays Roth Catch-Up Requirement for High Income Earners

There was some good news from the IRS recently for high-income earners making catch-up contributions to their employer-sponsored retirement plans.

The IRS recently issued a notice that they will be postponing one of the new rule changes under Secure 2.0 Act. If you recall, the Act was going to require high-income earners (individuals making over $145,000/year) over the age of 50, to make their catch-up contributions by way of Roth contributions beginning in 2024. As a result, any catch-up contribution made via Roth contribution would have eliminated the tax benefit for the participant for that year.

The IRS has decided to postpone this requirement until 2026 to try and give administrators time to implement the new guidelines and update Plan documentation. As such, the two-year delay allows savers (regardless of income) to continue to make pretax catch-up contributions through the end of 2025 as the agency implements the policy change.

“The administrative transition period will help taxpayers transition smoothly to the new Roth catch-up requirement and is designed to facilitate an orderly transition for compliance with that requirement.”

With the significant overhaul brought on by Secure 2.0 Act, there were many questions left unanswered. The Treasury Department and IRS are planning to issue further guidance intended to help taxpayers understand aspects of the Secure 2.0 Act and solicited public comment on the subject through October 24, 2023. We will continue to monitor any releases and keep you informed of the potential impact.

Please reach out to your Rockbridge advisor for any additional questions.

Ready to get started?

If you’re ready to start planning for a brighter financial future, Rockbridge is ready with the advice you need to achieve your goals.

Schedule a Call

Copyright © 2023 Rockbridge Investment Management - Syracuse, Binghamton, Watertown & Utica. All Rights Reserved. Privacy Policy