IRS Releases Regs Clarifying Mandatory Roth Catch-Up Rules

The IRS confirmed that it remains optional for employers to offer a Roth savings option.  If the plan itself does not offer a Roth savings option, an individual who is subject to the Roth catch-up requirement will not be permitted to make catch-up contributions at all (meaning that employers must track which employees are subject to the catch-up rule regardless of their choice). However, pursuant to the proposed regulations, if employees who are subject to the Roth catch-up requirement are permitted to make Roth catch-up contributions, all catch-up eligible employees must be permitted to make Roth catch-up contributions.  The IRS also clarified that only FICA wages from the employer are counted in determining whether the employee is subject to the Roth catch-up requirement.  Self-employment income is not counted. For more information on the new changes impacting catch-up contributions, visit Tax Facts Online. Read More: Link to Q3761.  Note: Q is updated.