IRS Proposes New Rules for Catch-Up Contributions

On January 10, 2025, the Treasury Department and the IRS proposed regulations addressing the SECURE 2.0 Act, focusing primarily on new rules for catch-up contributions in retirement plans. The regulations mandate that catch-up contributions for higher-income participants earning over $145,000 must be designated as after-tax Roth contributions, effective January 1, 2026. Additionally, individuals aged 60 to 63 will be allowed to make increased catch-up contributions, enhancing their retirement savings opportunities. The proposed guidance aims to clarify the implementation of these changes, which were introduced to improve retirement savings options and compliance with the SECURE 2.0 Act. Employers and plan administrators will need to navigate significant administrative complexities to adhere to these new requirements. Overall, these proposed regulations reflect ongoing efforts to enhance retirement savings for American workers.