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

Core 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.