IRS Delays Roth Catch-Up Contribution Requirement

Anne M. Meyer • August 28, 2023

On August 25, 2023, the IRS issued Notice 2023-62 , which gives retirement plan sponsors a two-year administrative transition period to implement the SECURE 2.0 requirement that certain catch-up contributions to 401(k) and similar defined contribution plans be made on an after-tax Roth basis. More specifically, SECURE 2.0 requires catch-up eligible participants who received more than $145,000 in wages from their employer in the prior year to make catch-up contributions on a Roth basis. This SECURE 2.0 requirement applies for tax years beginning after December 31, 2023. As we noted in a previous Employee Benefits Blog post Ready for Roth Contributions? , this deadline presented challenges given the necessary operational changes and outstanding questions regarding certain aspects of the statute. 

Notice 2023-62 addresses these concerns by giving plan sponsors until January 1, 2026 to implement the SECURE 2.0 Roth catch-up rule. It provides that the two-year administrative transition period is intended to facilitate an orderly transition for compliance. It also makes clear that, during this period, catch-up contributions will continue to be treated as satisfying the requirements of the Internal Revenue Code, even if they are not designated as Roth contributions. The Treasury Department and the IRS stated that they intend to issue future guidance to help plan sponsors implement this new rule. 

Importantly, Notice 2023-62 also fixes a technical glitch in SECURE 2.0 that inadvertently eliminated catch-up contributions altogether. It clarifies that participants who are age 50 and over may continue to make catch-up contributions in 2024 and later, regardless of income.

Notice 2023-62 provides welcome relief to plan sponsors who have been facing administrative challenges in implementing this provision. 

Employee burnout: what it is and how to prevent it

By Mardy Gould • May 24, 2024
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.

Form 720 and PCORI fee FAQs

By Mardy Gould • May 23, 2024
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.
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