Ready for Roth Catch-Up Contributions?
Sara Van Houten • June 23, 2023
- Currently, employers can (but are not required to) permit retirement plan participants who are age 50 or older to make catch-up contributions that exceed the otherwise applicable Section 402(g) limit (which is $22,500 for 2023). The 2023 catch-up contribution limit is $7,500. Participants can elect whether to make catch-up contributions on a pre-tax and/or a Roth basis.
- As of January 1, 2024, SECURE 2.0 changes these rules for older participants who receive more than $145,000 in wages from their employer in the prior year. It requires that older participants who meet this wage threshold make catch-up contributions on a Roth basis. This $145,000 limit will be adjusted for inflation beginning in 2025.
- SECURE 2.0 refers to “wages” as defined in Section 3121(a) of the Internal Revenue Code. This definition will likely differ from the definition of “compensation” or “wages” that many employers currently use under their plans and will require them to keep track of yet another dollar limit.
- Employers have questions about how this new rule applies, including:
- Since plans are not required to permit catch-up contributions, can employers eliminate the ability to make catch-up contributions only for participants who hit the $145,000 threshold in the prior year?
- Can employers require all catch-up contributions to be made on a Roth basis?
- How does the $145,000 wage requirement work for mid-year hires? For example, if an employee is required to make Roth catch-up contributions for the year based on prior year wages received from his or her employer, but then gets a job with a new employer in the same year, is the employee permitted to make non-Roth catch-up contributions to his or her new employer’s retirement plan?
- Employers with plans that do not currently offer Roth contributions need to decide whether to implement a Roth feature or to eliminate catch-up contributions altogether.
- Employers should be working with their recordkeepers and their payroll providers to ensure that they understand the impact of this change and are making the system changes necessary for implementation.
- We would expect additional guidance on this new requirement or a deadline extension before the end of 2023.
Employee burnout has become an epidemic in today’s modern workplace. So much so that the World Health Organization (WHO) officially recognizes it as an “occupational phenomenon.”1
While many used to consider mounting workplace stress an individual employee problem, these days, it’s become an employer’s responsibility to prevent burnout before it hurts productivity and business performance—not to mention your employees’ physical and mental health.
Luckily, you can prevent burnout from affecting your workforce in several ways. This article will explore the causes and signs of employee burnout and the steps you can take to create a positive work environment where employees feel safe from toxic stress levels.
If you're a small business owner, you may have heard of the acronym PCORI and the fees that come with it. But what is PCORI, and how does it apply to your organization?
Under the Affordable Care Act (ACA), sponsors of self-insured health plans must pay a fee to fund the federal Patient-Centered Outcomes Research Institute (PCORI). PCORI is an independent organization the ACA created to conduct research to help healthcare consumers make better decisions for their specific needs and outcomes. It also performs research related to clinical effectiveness.
Employers offering a self-insured medical reimbursement health plan, such as a health reimbursement arrangement (HRA), must pay this fee by July 31 each year via Form 7201. This fee was initially set to expire in 2019, but Congress extended it through September 30, 20292, due to the Further Consolidated Appropriations Act of 20203.
