The Internal Revenue Service delayed the start date of a new rule that will require higher earners’ catch-up 401(k) contributions to be made on an after-tax basis into a Roth account, rather than pretax.

For reference, the SECURE 2.0 Act which was enacted in December 2022 included this ROTH catch-up contribution rule which applies to an employee who participates in a 401(k), 403(b) or governmental 457(b) plan and whose prior-year Social Security wages exceeded $145,000.

The recently added administrative transition period extends the new requirement until 2026 stating that any catch-up contributions made by higher‑income participants in 401(k) and similar retirement plans must be designated as after-tax Roth contributions.

The administrative transition period is designed to help taxpayers transition smoothly to the new Roth catch-up requirement and to facilitate an orderly transition for compliance with that requirement.

At the same time, the IRS also clarified that plan participants who are age 50 and over can continue to make catch‑up contributions after 2023, regardless of income.

Read more about this update on the IRS website, and view the official notice for more information.