Lawmakers should challenge instant transition reduction underneath the Setting Each Group Up for Retirement Enhancement (Safe) 2.0 Act or ”many retirement plan contributors will lose the flexibility to make catch-up contributions” on the finish of this 12 months, in line with the American Advantages Council and the Nationwide Affiliation of Authorities Outlined Contribution Directors (NAGDCA).
The 2 lobbying teams instructed members of the Home Methods and Means Committee in a current letter that laws is required to delay the efficient date of Part 603 of Safe 2.0, or the IRS can institute a repair.
Ed Slott of Ed Slott & Co., instructed ThinkAdvisor Monday in an electronic mail that the 2 teams need “the IRS to delay the 2024 efficient date of the Safe 2.0 provision that requires sure high-paid workers who want to make age-50-or-older catch-up contributions to make them on a Roth foundation.”
The issue, Slott relayed, “is that plans will not be required to supply a Roth possibility for worker wage deferrals, and plenty of nonetheless don’t. Safe 2.0 could be learn to say that plans that don’t begin providing Roth accounts by 1/1/24 can now not supply catch-up contributions for any age-50-or-older workers.”
The ABC, Slott stated, “is stating that there is probably not sufficient time for plans with out the Roth choice to put that possibility in place by 1/1/24. Subsequently, catch-ups would turn out to be unavailable for all older workers — a end result that no person desires.”
The commerce teams stated they noticed the difficulty whereas working to implement Safe 2.0.
Particularly, they wrote, “though some plans might be able to comply …. at nice price and burden, an enormous variety of plans and employers won’t be able to adjust to the brand new requirement, efficient for 2024, that staff who earned over $145,000 within the previous 12 months from the present employer should make their catch-up contributions on a Roth foundation.”
For a lot of of those plans, they continued, “except this requirement is delayed in a short time (i.e., this summer time), their solely technique of compliance can be to remove all catch-up contributions for 2024.
“If a delay just isn’t introduced till, for instance, the fourth quarter,” the teams wrote, “it will likely be too late to forestall this adversarial end result, since compliance programs have to be designed effectively earlier than the efficient date.”
