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This morning the IRS in IR-2025-91 announced that the pending Secure 2.0 final regulations regarding catch-up contributions to qualified retirement plans will be published tomorrow, 9/16/2025, in the federal register.
My initial reading of a summary has two key takeaways for me.
A requirement that catch-up contributions that will require such catch-up contributions to be ROTH for certain taxpayers based their on earned income ($145K indexed) of the prior tax year.
The effective date of the new catch-up provision will now be for tax years after 12/31/2026, so starting in 2027 for plans using calendar years.
I am certain there will be matters in final regulations that will be of concern to others. An advanced copy of the 94 pages of final regulations are here.
A more readable early read summary from the National Association of Plan Advisors (NAPA) is what I am currently reading. The NAPA comment “Under SECURE 2.0, the deadline for compliance was initially for tax years beginning after Dec. 31, 2023, but it was postponed to 2026 by the IRS due to its administrative complexity.” is a understatement of the tax complexity these regulations require. Ultimately the cost of such tax complexity will be absorbed by the plan participants regardless if they make catch-up contributions or not.
Bill, you are spot on. We had to work with the plan admin to modify the systems in order to be compliant here at work. The one that gave me the biggest headache was the so called super catch up! when I broke it down it really only allows the participant between age 60-63 to save an additional $11250 over the three years and then back to the regular catch up. I don’t get the point of doing this. When I put the $11k in my calculator assuming a rate of return of 8%, it grew to $43k. but at that point I am 83 years old. I just don’t see the point of this.
Since the regular catch-up is $7500, the super catch-up is only $3750 extra for 2025. Over four years that’s $15000 plus inflation adjustments. I just gave my wife a raise since I assumed her plan would have this feature, but it doesn’t this year, so she hit the max catch-up.
Your plan will likely have to issue a Summary of Material Modifications (SMM) which must be issued to plan participants within 210 days after the end of the plan year in which a material change was adopted because of this elective change to the plan.
Plan administrators could also satisfy this requirement by distributing an updated Summary Plan Description (SPD) by the same deadline.
I hope the participation in age 60-63 additional catch-up justifies the additional headaches to amend the plan and administer these changes.