Treasury Department, IRS Asked to Push Back Secure 2.0 Plan for Roth Catch-Ups

The National Association of Government Defined Contribution Administrators has issued its third letter in two years asking for an extension of the implementation time around implementing one of the SECURE 2.0 Act of 2022’s most complicated provisions that affects government plans.

The letter, addressed to legal counsel at the U.S. Department of the Treasury and to the IRS, renewed a March 2023 request for additional implementation time for SECURE 2.0’s Section 603(b) (1) and (2) concerning designated Roth catch-up contributions to contributions for governmental plans.

Section 603 requires catch-up contributions for participants whose wages subject to federal income tax in the prior tax year be made using after-tax dollars through a Roth account if the participant has earned that pay level with the current employer.

Originally, compliance was required by 2024. In August 2023, the IRS granted a two-year delay in the provision’s effective date, from year-end to December 31, 2025. NAGDCA applauded the decision that month.

NAGDCA’s latest letter, authored by NAGDCA Executive Director Matt Petersen, cited proposed regulations issued on January 13, providing collectively bargained plans with additional implementation time. NAGDCA requested that governmental plans receive the same extension.

“We submit that governmental plans often face complexities in local law enabling requirements, payroll systems, and administration that most private sector employers do not,” the letter stated. “Indeed, these challenges can be seen as not dissimilar to those faced by collectively bargained plans.”

For collectively bargained plans, the regulations are applicable to contributions in taxable years starting after the later of:

• The first taxable year beginning after a six-month period following the publication of the final regulations; and
• The first tax year beginning after the termination of the last collective bargaining agreement related to the plan that was in effect on December 31, 2025, excluding extensions.

Petersen also wrote NAGDCA’s March 2023 letter, which noted that most government plans did not have Roth offerings and would not be able to add one until state laws and collective bargaining agreements were updated.

A May 2023 letter, signed by NAGDCA and other organizations, such as the U.S. Conference of Mayors and the National Conference of State Legislatures, suggested that some plans would have to drop catch-ups altogether until they could update their plan administration to accommodate Roth contributions.

Petersen emphasized that additional time—beyond the two-year delay—is necessary for governmental plan sponsors to be able to comply.

“Although governmental plans have been working diligently to be ready for 2026, because final regulations have not been issued, many are waiting on final regulations to complete their implementation steps.”