IRS confirms SECURE 2.0 age 60-63 “super catch-ups” are optional 

Just-proposed IRS regulations provide urgently needed guidance on the increased catch-up contribution limit under the SECURE 2.0 Act of 2022 (Div. T of Pub. L. No. 117-328) for defined contribution plan participants ages 60-63. Many employers offering catch-up contributions will be relieved to know they are not required to offer the higher “super catch-up” limit but can continue to offer the regular limit to all catch-up eligible participants.

The catch-up contribution rules allow participants ages 50 and older to make contributions above the applicable annual dollar limit on elective deferrals. Without reflecting the SECURE 2.0 changes, the catch-up contribution limit for 2025 is $7,500 for participants in 401(k), 403(b) and governmental 457(b) plans. Starting this year, SECURE 2.0 increases the catch-up limit for participants ages 60-63 to $11,250 (both limits are indexed for inflation). The law makes a similar change to the catch-up contribution limits under savings incentive match plans for employees (SIMPLE plans).

Since the law’s enactment, many employers and administrators have been unsure about the impact of a separate nondiscrimination rule in the Internal Revenue Code and regulations — known as the “universal availability requirement” — on the higher catch-up limit. This rule generally says that a plan that offers catch-up contributions will not satisfy the nondiscrimination requirements unless all catch-up eligible participants are provided with an effective opportunity to make the same dollar amount of catch-up contributions. The proposed regulations provide the following clarifications on how the universal availability requirement applies to the higher catch-up limit:

• Plans that offer catch-up contributions do not have to offer the higher catch-up limit. Plans can limit catch-up contributions for participants ages 60-63 to the same limit that applies to all other catch-up eligible participants.
• Plans that offer the higher catch-up limit to participants ages 60-63 will not violate the universal availability requirement, even though all other catch-up eligible participants are unable to make catch-up contributions in the same dollar amount.

While the regulations are proposed to be effective for tax years beginning six months after publication of a final rule, sponsors can rely on the proposal for 2025 and future tax years. IRS is accepting comments on the proposed regulations until March 14.

• Proposed regulations (Federal Register, Jan. 13, 2025)

• User’s guide to SECURE 2.0 (Updated periodically)
• DC plans need guidance on SECURE 2.0’s higher catch-up limit (May 1, 2023)