{"id":2013118,"date":"2023-08-26T15:02:01","date_gmt":"2023-08-26T19:02:01","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/irs-bows-to-pressure-grants-2-year-reprieve-on-401k-catch-up-contribution-rule\/"},"modified":"2023-08-26T15:07:59","modified_gmt":"2023-08-26T19:07:59","slug":"irs-bows-to-pressure-grants-2-year-reprieve-on-401k-catch-up-contribution-rule","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/irs-bows-to-pressure-grants-2-year-reprieve-on-401k-catch-up-contribution-rule\/","title":{"rendered":"IRS yields to pressure, allows 2-year extension on 401(k) catch-up contribution rule."},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">24<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Firs-bows-to-pressure-grants-2-year-reprieve-on-401k-catch-up-contribution-rule%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=2013118&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><div data-post-content=\"true\" class=\"post_content\" id=\"post_content\">\n<h2>The IRS Delays Controversial Roth Catch-Up Contribution \u200dRule<\/h2>\n<p>The\u200c Internal Revenue Service (IRS) has agreed to put a two-year freeze on implementation of a contentious new rule that requires catch-up contributions by higher-income\u200d participants in 401(k) and \u2064similar retirement plans to be \u2063designated\u2064 as\u200b after-tax Roth contributions.<\/p>\n<p>Bowing to public pressure, the IRS <a href=\"https:\/\/www.irs.gov\/newsroom\/irs-announces-administrative-transition-period-for-new-roth-catch-up-requirement-catch-up-contributions-still-permitted-after-2023\" target=\"_blank\" rel=\"noopener\">has \u200cagreed<\/a> to provide\u2064 an administrative transition period until 2026 that postpones enforcement of a \u200cnew\u2063 provision in the SECURE \u200c2.0 Act that requires catch-up contributions \u2063by <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/irs-bows-to-pressure-grants-2-year-reprieve-on-401k-catch-up-contribution-rule\/\" title=\"IRS yields to pressure, allows 2-year extension on 401(k) catch-up contribution rule.\">higher-earning \u2062retirement plan participants<\/a> to \u200dbe designated not as pre-tax contributions to plans like the 401(k) but as after-tax contributions\u200b to Roth IRA accounts.<\/p>\n<p>The new Roth catch-up \u200ccontribution rule \u2063(Section 603 of the SECURE 2.0 Act) applies to people who participate in 401(k), 403(b), or 457(b) plans and whose prior-year \u200cSocial Security wages exceeded $145,000.<\/p>\n<blockquote>\n<h3>Related\u2062 Stories<\/h3>\n<ul>\n<li><a href=\"http:\/\/www.theepochtimes.com\/article\/irs-accused-of-backdating-penalty-approvals-in-crackdown-on-conservation-easement-tax-breaks-5477909\">IRS Accused of Backdating Penalty Approvals\u2064 in Crackdown on Conservation Easement Tax\u200c Breaks<\/a> &#8211; 8\/22\/2023<\/li>\n<li><a href=\"http:\/\/www.theepochtimes.com\/us\/house-panel-subpoenas-doj-irs-officials-over-claims-of-meddling-to-protect-hunter-biden-5477934\">House Panel Subpoenas DOJ, IRS Officials Over\u200c Claims of\u200d Meddling to Protect Hunter Biden<\/a> &#8211; 8\/21\/2023<\/li>\n<\/ul>\n<\/blockquote>\n<p>Also, the \u200dIRS provided additional \u200cclarification that plan participants aged 50 and older can \u2063continue to \u200bmake catch-up \u2063contributions after 2023, regardless\u200c of income.<\/p>\n<p>&#8220;The IRS basically has announced that they are going to interpret \u200baround the legislative \u200ctext\u2062 glitch that&#8217;s been discussed,\u201d said Kelsey Mayo, Outside Director of Regulatory Affairs for the American Retirement Association, according to a <a href=\"https:\/\/www.napa-net.org\/news-info\/daily-news\/breaking-news-irs-grants-two-year-delay-roth-catch-requirements\" target=\"_blank\" rel=\"noopener\">note issued<\/a> by the National \u200dAssociation of Plan Advisors.<\/p>\n<p>\u201cThey&#8217;re essentially saying catch-up provisions have not\u2063 been eliminated, period. That\u2019s point No. 1,&#8221; Ms. \u200cMayo added. &#8220;And point \u200bNo. 2 is now you don&#8217;t have to make it a Roth \u2063for two years, \u200cand it can continue \u200cto \u200bbe pre-tax catch-ups \u2064until \u20622026 regardless of \u200cincome.\u201d<\/p>\n<p>The American Retirement Association was one of over 100 organizations that, in a June letter\u200c (<a href=\"https:\/\/www.hrpolicy.org\/getmedia\/b8d717ab-d90b-44b5-9bbf-766e27546003\/retirement_roth-catch-up_congress_groupletter062923-002.pdf\" target=\"_blank\" rel=\"noopener\">pdf<\/a>) to the \u200dHouse Ways and \u2063Means\u200d Committee, demanded a two-year delay in implementing\u200b the \u200dnew Roth IRA catch-up rule.<\/p>\n<h2>Request for \u20622-Year Transition<\/h2>\n<p>The coalition letter cited an inability on the \u2064part of many signatories\u2014to adapt\u200d their systems to ensure that catch-up contributions will\u2062 be made on a\u2063 Roth IRA basis for those earning more than $145,000 in\u200d the preceding year.<\/p>\n<p>&#8220;Unless \u200ctransition relief is granted\u2063 as soon as possible, many retirement plan participants will lose the \u200cability to make catch-up\u2062 contributions at the end of this\u2064 year,&#8221; the signatories wrote.<\/p>\n<p>&#8220;For many of these plans, unless this requirement is delayed very quickly (i.e., this summer),\u2063 their \u200donly means \u2063of compliance will be to eliminate all\u2062 catch-up contributions for 2024.&#8221;<\/p>\n<p>The reason\u200b is that, for the most part, the signatories lack arrangements that\u2063 coordinate retirement plan recordkeeping with payroll systems (which determine who earned more than $145,000 in the\u200c prior\u200c year).<\/p>\n<p>&#8220;These circumstances\u2062 pose a long list of other obstacles including, for many plans, the challenges of adding\u200d a Roth feature and communicating that feature to participants, as well as special challenges for state and local governments and collectively bargained plans,&#8221; the signatories wrote.<\/p>\n<p>Their request was for Congress \u200bto pass legislation\u2063 to provide a \u2064two-year delay to allow employers and plan providers to adapt their systems\u2014or\u200d for the IRS to\u2064 act unilaterally and grant relief from the new catch-up contribution \u200crule.<\/p>\n<p>With \u2063its Aug. 25 announcement, \u2063the IRS \u2063has done just that.<\/p>\n<p>&#8220;The administrative transition period will help taxpayers transition smoothly to the new Roth\u2063 catch-up requirement and is designed to facilitate an orderly transition for \u200dcompliance \u200bwith that requirement,&#8221; the IRS wrote \u200din the announcement.<\/p>\n<p>American Retirement \u200dAssociation\u200c CEO Brian\u2063 Graff said that \u2062the organization had asked for relief on \u2062the issue &#8220;and\u00a0we really appreciate Treasury and the IRS understanding how\u2064 challenging it would have \u200bbeen to comply with \u200cthe mandatory Roth catch-up\u2063 requirement\u200c by January 1, 2024.\u201d<\/p>\n<p>\u201cAllowing for a two<a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/british-pm-sold-out-fish-in-brexit-trade-deal-fishermen-say\/\" title=\"British PM sold out fish in Brexit trade deal, fishermen say\">-year transition period<\/a> is\u200b a big win for plan sponsors, recordkeepers and participants,\u201d Mr. Graff added.<\/p>\n<p>Traditional 401(k)\u200d accounts are funded with \u200b<a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/bidens-latest-whopper-on-the-inflation-reduction-act-is-so-big-even-twitter-flagged-it\/\" title=\"Biden\u2019s Latest Whopper On The Inflation Reduction Act Is So Big Even Twitter Flagged It\">pre-tax earnings<\/a>, and withdrawals are taxed once savers enter retirement. Roth IRA accounts, by contrast, \u200dare funded by after-tax dollars, with subsequent withdrawals being tax-free.<\/p>\n<h2>Other Changes Under SECURE 2.0<\/h2>\n<p>The SECURE 2.0 legislation introduced a number of other changes, as well.<\/p>\n<p>The legislation changed\u200d the \u2063age at which\u2064 people are required to start taking \u200cminimum distributions from\u200d their <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/5-reasons-making-taxpayers-pay-off-student-loans-is-a-rotten-idea\/\" title=\"5 Reasons Making Taxpayers Pay Off Student Loans Is A Rotten Idea\">retirement accounts<\/a> and expanded access to retirement savings\u2064 plans for <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/these-21-states-are-opting-out-of-enhanced-unemployment-benefits-heres-what-you-need-to-know\/\" title=\"These 21 States Are Opting Out Of Enhanced Unemployment Benefits. Here\u2019s What You Need To Know.\">part-time workers<\/a>.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>allows higher-income participants in 401(k) plans to make catch-up contributions without designating them as after-tax Roth contributions. This decision comes after concerns were raised about the impact of the new rule, and the IRS has responded by offering a two-year freeze and an extended transition period until 2026.<\/p>\n","protected":false},"author":118,"featured_media":2013119,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[543],"tags":[],"class_list":["post-2013118","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-epoch-times"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2013118","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/118"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=2013118"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2013118\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2013119"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=2013118"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=2013118"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=2013118"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}