IRS extends deadline requiring catch-up contribution only to Roth 401(k)
Under Secure 2.0 Act, enacted in December 2022, new catch-up contributions to 401(k), 403(b) or governmental 457(b) plan will be considered as Roth contributions for employees whose prior-year Social Security wages exceeded $145,000. The start-date of such a rule was originally January 1, 2024. IRS has extended the deadline to January 2026.
This ruling would have limited the choice for employees to contribute catch-up contributions for employees who are age 50 or over to Roth 401k only. Since Roth contributions are after-tax, the employees would be paying taxes on the catch-up contributions. However, Roth contributions have many benefits such as the amount grows tax-free and can be withdrawn tax-free during retirement.
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