This Catch Up Roth change is going to be fun and it’s going to be a hot mess

To pay for the tax savings implemented by SECURE 2.0, there was a huge tax revenue earner. Beginning in 2024, SECURE 2.0 significantly changes the rules for catch-up contributions. The law will require plans that permit catch-up contributions to accept catch-up contributions from participants who are Highly Compensated Employees (earned more than $145,000 in the prior year) only on a Roth basis.

Without guidance on how to deal with this, there are a lot of unanswered questions out there. Can plan sponsors eliminate catch-up contributions, rather than deal with the inevitable headaches? Could they require all employees to make catch up on a Roth basis? Plus, you know, there will be errors with highly compensated employees deferring catchup pre-tax. With six months to go before implementation, guidance would be nice.

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