What is the Effective Date of Roth Catch-Ups for Governmental 403(b) Plans?

Q: I heard the effective date for mandatory Roth catch-up contributions for certain high earners under the SECURE 2.0 Act of 2022 was delayed for governmental 403(b) plans. Is this correct?

Kimberly Boberg, Kelly Geloneck, Emily Gerard and David Levine, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

A: You are somewhat correct. In the final regulations issued on September 15, the IRS did not extend the administrative transition period established by Notice 2023-62, which means the requirement for high earners (i.e., individuals who earned more than $145,000, indexed to inflation, in prior-year FICA wages from the employer sponsoring the plan) to make catch-up contributions as Roth contributions begins for taxable years starting on January 1, 2026. That said, the IRS did extend the effective date for the final regulations relating to this provision, as we noted in our recent column.

The IRS extended the applicability date for the final regulations for governmental plans to the later of December 31, 2026, or the first taxable year beginning after the close of the first regular legislative session of the legislative body with the authority to amend the plan that begins after December 31, 2025. If a legislative body does NOT have the authority to amend the plan, the deadline would be the first taxable year beginning after December 31, 2026.

The IRS also extended the applicability date of the Roth catch-up requirement for collectively bargained plans to contributions made in the first taxable year after the later of December 31, 2026, or the date on which the last collective bargaining agreement related to the plan that is in effect on December 31, 2025, terminates (determined without regard to any extension of those agreements).

NOTE: This feature is to provide general information only, does not constitute legal advice and cannot be used or substituted for legal or tax advice.

Do YOU have a question for the Experts? If so, we would love to hear from you! Simply forward your question to Amy.Resnick@issmarketintelligence.com with Subject: Ask the Experts, and the Experts will do their best to answer your question in a future column.