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National Associations Working to Delay Implementation of SECURE 2.0 Catch-up Contributions

Recently, a coalition of retirement industry associations (including the National Association of State Retirement Administrators (NASRA), National Conference on Public Employee Retirement Systems (NCPERS) and National Council on Teacher Retirement (NCTR) as well as trade associations representing private single and multiemployer plans, record keepers and service providers) has been working collaboratively to delay the effective date of Section 603 of the SECURE 2.0 Act of 2022 (SECURE 2.0).

To further their efforts, an Action Letter to Congress and the U.S. Treasury Department has been created to demonstrate the extent of the organizations needing more time to implement Section 603 regarding catch-up contributions to Section 401(a) qualified plans, Section 403(b) plans, and governmental Section 457(b) plans that must be made on a Roth basis. The letter is requesting a two-year delay in the effective date for the Roth catch-up requirement currently scheduled to take effect on January 1, 2024.

On June 7, 2023, a white paper was also published by the American Benefits Council, A Delayed Effective Date is Needed to Preserve Catch-Up Contributions for Older Workers. The white paper has been distributed to key congressional offices and meetings. It explains the issues various organizations face implementing Section 603 related to catch-up contributions under the SECURE 2.0 Act.

Specifically, beginning on January 1, 2024, all age-based catch-up contributions are to be made as Roth contributions for retirement plan participants that earned more than $145,000 in FICA wages in the prior year from the current employer. Unless transitional relief is granted, many retirement plan participants will lose the ability to make catch-up contributions at the end of this year. As a result, many plans would have to eliminate all catch-up contributions for 2024 since compliance systems must be designed in advance of the effective date.

The white paper also states, “Many governmental retirement plans are governed by state or local statutes, and the Roth catch-up requirement will require an amendment to those statutes. In some cases, it simply would not be possible for these legislative bodies to adopt the necessary amendments before January 1, 2024.”

The Action Letter is available here and the white paper is available here.