IRS Regulators Finalize Post-Tax Catch-Up Contribution Rule (1)

The IRS finalized workplace 401(k) amendments requiring new catch-up contributions to be made as post-tax Roth deferrals.

The regulation allows highly compensated workers over the age of 50 to contribute more under standard plan designs as long as they are Roth contributions.

Plans aren’t required to set up Roth accounts, but if catch-up contributions are currently only pre-tax, they must add Roth accounts or limit pre-tax catch-up contributions to non-highly paid participants.

The regulation confirms the $145,000 FICA wage cut-off for post-tax contributions, but Roth contributions a participant has already made to their account can count toward the catch-up limits. ...