SECURE 2.0 Act Information
New SECURE 2.0 Act ’Age-Related Catch-up Limits’ are to become effective in calendar year 2025.
Beginning in January of 2025, a new Age-Related Catch-up rule becomes available for participants who will have reached their 60th, 61st, 62nd, or 63rd birthday by December 31st of 2025. The ’Age 60-63 Catch-up Limit’ is projected to be $11,250, which is $3,750 more than the $7,500 ’Age 50 Catch-up Limit.’
These figures are based on the assumption that the ’Age 50 Catch-up Limit’ will remain unchanged at $7,500 in 2025. If the ’Age 50 Catch-up Limit.’ should increase to $8,000 in 2025, the ’Age 60-63 Catch-up Limit’ would be $12,000, which would be $4,000 more than the $8,000 ’Age 50 Catch-up Limit.’
The formula for the ’Age 60-63 Catch-up Limit’ is the larger of:
- $10,000 (indexed); and
- Twice the ’Age 50 Catch-up Limit.’
Consequently, beginning in 2025 there will be two Age-Related Catch-up Limits:
- The ’Age 50 Catch-up Limit’ for participants who by December 31st of 2025 will reach the age of:
- 50 through 59; or
- 64 or older.
- The ’Age 60-63 Catch-up Limit’ for participants who by December 31st of 2025 will reach the age of:
New SECURE 2.0 Act ’Age-Related Catch-ups Must Be Roth for Highly Compensated Employees’ Rule is to be tested in 2025 and become effective in 2026.
Beginning in January of 2026, all Age-Related Catch-up contributions in 403(b) and 457(b) plans for participants whose Social Security Wages exceeded $145,000 (indexed) in the previous year must be designated as Roth (after-tax) contributions. Such participants will be designated as Highly Compensated, or HC for short.
Click here to learn more about Roth contribution options.
While 2026 might seem too far in the future to be concerned now, the complexities associated with implementation of this requirement for employers, vendors, record-keepers, and third party administrators (TPAs) motivated the IRS to publish Notice 2023-62, which established a 2-year administrative transition period (2024-2025), intended to facilitate an orderly transition for compliance with the requirement.
The following four bullet points are minor modifications of those appearing on this ERIC web page.
- Employers will need to coordinate with their payroll providers and retirement plan recordkeepers, given that the $145,000 limit is not related to any other limit that currently exists for qualified retirement plans.
- Currently, employers do not have any system in place to determine who had FICA wages of more than $145,000 in the preceding year.
- Employers’ current payroll systems do not distinguish between employees based on age.
- Employers will need to communicate the required changes to relevant retirement plan participants well before the 1/1/2026 effective date.
CCC will be working closely with all of its clients to develop and test new systems designed to meet those challenges prior to the 1/1/2026 deadline. We have already distributed draft 403(b) plan document amendments to clients whose plans do not currently include the Roth 403(b) optional feature. We continue to encourage our clients to adopt the Roth option, for several reasons:
- Adding the Roth option expands supplemental retirement savings opportunities for employees; and
- Plan participants can start the Roth 5-taxable-year period of participation clock ticking by making even a small first Roth contribution.
Preparations Needed by CCC Clients Prior to the 1/1/2026 implementation Date
For 403(b) Plans
- If your 403(b) plan does not currently allow Roth contributions, you should have received an email message from CCC containing a link to a 403(b) Plan Document amendment.
- If your 403(b) plan does currently allow Roth contributions, no 403(b) Plan Document amendment is needed.
For 457(b) Plans
- See information about the Oregon Savings Growth Plan (OSGP) and the Washington Deferred Compensation Plan (WDCP) at the bottom of this page.
- If you currently offer a 457(b) plan, but your 457(b) plan does not currently allow Roth contributions, you should contact your 457(b) Plan vendors.
- If you currently offer a 457(b) plan and your 457(b) plan does currently allow Roth contributions, no 457(b) Plan Document amendment is needed.
- Contact CCC if you do not currently offer a 457(b) plan, but are interested in establishing one.
Outline of CCC’s Implementation Plans
- During the last quarter of 2023 and the first three quarters of 2024, CCC will be upgrading all of its systems to ensure they can properly deal with the new rule.
- Beginning in January of 2025, CCC intends to distribute Test SECURE 2.0 Reduction/Suspension Warning List (Test RSWL) email reports along with the standard monthly Reduction/Suspension Warning List (RSWL) email reports already being received by RSWL contacts. The Test RSWL reports will specify the number of participants who are projected to utilize the 403(b) Age 50+ Catch-up provision and/or the 457(b) Age 50+ Catch-up provision before the end of calendar year 2025, if any exist. These expanded reports will provide links to pages where an RSWL Contact will be able to login to the CCC system and assign appropriate HC Status values to each listed participant. Click here. to download a sample Approximation to an Initial Test RSWL report.
- The HC Status determinations are to be assigned based on comparisons between 2024 Social Security Wages (Box 3 of Form W-2) and $145,000.
- If 2024 Social Security Wages exceeded $145,000, the HC Status should be specified as Yes.
- If 2024 Social Security Wages did not exceed $145,000 the HC Status should be specified as No.
- The CCC database will be instantly and securely updated when the appropriate HC Status has been assigned for all participants listed.
- After the HC statuses have been assigned by an RSWL Contact for all such participants, CCC will send out Follow-up Test RSWL Reports with further information. Click here. to download a Sample Follow-up Test RSWL Report.
- Also, CCC will send draft test emails to CCC’s employer contacts for all HC participants projected to utilize the Age 50+ Catch-up. These email messages will provide careful explanations of next steps that would have been necessary if the Roth Catch-up Rule had been effective in 2025. The Employer will be encouraged to forward these email messages to the affected participants. Click here to download a Sample Email Message to an Affected Participant.
- Additional information regarding the 2025 tests of CCC’s updated systems will appear here and be provided to RSWL contacts during the fourth quarter of 2024.
Preliminary Information About Oregon and Washington State 457(b) Deferred Compensation Plans
Email message from John Bennett/Jack Schafroth to OSGP plan sponsors:
From: BENNETT John * PERS
Date: Wed, Jul 12, 2023 at 8:33 AM
Subject: Oregon Savings & Growth Plan Roth Option
To: Unspecified Recipients
Cc: SCHAFROTH Jack * PERS
Hello,
Thank you for partnering with the Oregon Savings Growth Plan in helping you employees save for a more secure retirement. I am reaching out to inform you of an upcoming plan change due to passage of the Secure Act 2.0 last December.
Starting January 1, 2024 (subsequently changed to 2026 by Notice 2023-62), certain age 50+ catch-up contributions must be made as Roth 457 contributions. This new rule will apply to anyone who seeks to use the age 50+ catch-up provision and who made over $145,000 in the previous calendar year. Note: This new rule does not affect the 3-year catch-up.
Since you do not currently allow Roth 457 contributions, I wanted to reach out to give you a heads up, before this change goes into effect on 1/1/24 (subsequently changed to 2026 by Notice 2023-62). You may choose to start allowing Roth contributions earlier than the 1/1/24 (subsequently changed to 2026 by Notice 2023-62) deadline by reaching out to me directly. Please do not hesitate to reach out if you have any questions regarding this upcoming change.
We will also be blocking out time on our field presenter’s schedules in December and January should you want to schedule one of us out to give an overview of Roth verses pre-tax investing to your staff.
Thanks,
Jack Schafroth
Interim Program Manager
Oregon Savings Growth Plan
503-603-7632 p
503-603-7655 f
Jack.schafroth@state.or.us
Click here to review the Washington Deferred Compensation Plan (DCP) DRS Notice 23-007, Preparing for October DCP Roth Option.