Two-Year Delay in Roth Catch-Up Requirements and Additional Updates

SECURE 2.0 Section 603

Guidance on section 603 of the SECURE 2.0 Act with respect to catch-up contributions was released by the IRS on August 25th of this year. Section 603 requires that catch-up contributions must be designated as Roth contributions pursuant to an employee election. The notice announced a two-year delay in this requirement under an administrative transition while the IRS and the Treasury Department work through the taxpayer concerns regarding implementation of this requirement.

As a result of this new guidance, any employee who participates in a 401(k), 403(b), or governmental 457(b) plan and whose prior year Social Security wages exceed $145,000 will not have to make mandated catch-up contributions until 2026. Additionally, until taxable years beginning after December 31, 2025, any catch-up contributions made will be treated as satisfying the parameters of the new SECURE 2.0 requirement. Optional catch-up contributions can continue to be made by participants age 50 and over after 2023 regardless of whether they are designated as Roth contributions and regardless of income. The full text of the guidance issued by the IRS, including information on where comments on this guidance can be submitted to the IRS, can be found here.

Erroneous Late Filing Notices from the IRS

On August 25th, the IRS also contacted the American Retirement Association to confirm that due to a programming glitch, erroneous notices were sent to plan sponsors and advisors regarding their supposed late filing of the 2022 Form 8955-SSA. The programming glitch has been fixed and the IRS is working on a newsletter to address what the public should do with those notices.

The 8955-SSA is a supplemental return that is filed along with the 5500 for the 401K plan. You do not need to pay the penalty notice, as these returns were filed timely, however if you do receive the notice, please send us a copy of the notice. We will provide you with a letter to be placed on company letterhead, signed, and faxed to the IRS for the Penalty to be waived.

New Domain

Sentinel’s website has been officially changed to sp-tpa.com. Additionally, all e-mails for your Third-Party Administrators will now come from this sp-tpa.com domain name. Updated e-mail addresses can be found on our new website. We look forward to continuing to serve you under this new domain name which aligns more with Sentinel’s brand.    

Lainey Eddlemon