Season 5, Episode 9: Catching Up on Catch-Ups

On September 15, the IRS/Treasury announced the much-anticipated final regulations on SECURE 2.0’s new limits on catch-up contributions. In this episode Nevin & Fred talk about what lies ahead.

These final regulations apply to retirement plans thatpermit participants who have attained age 50 to make additional elective deferrals that are catch-up contributions—which will now be restricted to Roth for individuals making $145,000 or more (adjusted for inflation), effective in January.

A recent Plan Sponsor Council of America survey found thatfewer than 5% of plan sponsors said they were “ready to go” with these changes, while more than 4 in 10 were “struggling with payroll logistics.” On the other hand, nearly as many (40.2%) said they expected to be ready by January 1.

Things to note:

1. This IS going to happen (some had thought/hoped there would be an extension).

2. If your plan doesn’t allow Roth, you can't do Roth catch-ups(or catch-ups for those earning more than $145k in FICA wages).

3. You don't have to allow Roth. But with this change, you might want to reconsider.

4. You’ll get more time/flexibility to correct mistakes (andthere will surely be mistakes).

In this episode we’ll also discuss the issues surrounding personalization and personal data: lawsuits challenging utilization for purposes NOT related to the plan—and massive SEC fines for allegedly inadequate disclosures.

Episode Resources:

Catch-Up “Muster”

Breaking News: IRS Releases Final Roth Catch-UpRegulations

Are Plan Sponsors Ready for Roth Catch-Ups?

IRS Grants Two-Year Delay in Roth Catch-Up Requirements

Auto-Enrollment and Roth Catch-Up Guidance Proposed byIRS

Personalization Issues

Schlichter Says Empower Improperly Used Data in 401(k)Managed Account Push

Schlichter Targets TIAA, Morningstar in Multi-Plan Suit

Empower, Vanguard Managed Account Disclosures TriggerMammoth SEC Fines

Bonus: Songs to Retire By - Fred Reish