IRS Guidance Answers Employer Questions on Roth Matching Contributions from SECURE 2.0 Act

The IRS issued guidance on twelve (12) provisions of the SECURE 2.0 Act on December 20, 2023. Included in the guidance were details surrounding the ability of an employer to make Roth matching or non-elective contributions to their 401(k), 403(b), or 457(b) plan. While recordkeepers for qualified retirement plans are still updating their systems to accommodate many of the changes made by SECURE 2.0, employers can begin consideration of this matter if they wish to enhance their qualified plan.

The guidance provides answers to the following:

• How are Roth matching/non-elective contributions accounted for and reported by employers?
• How are those same contributions taxed and reported by employees?
• When are the Roth matching/non-elective contributions included as income?
• Is an employer required to allow Roth matching/non-elective contributions?
• Are there restrictions on who is eligible to receive Roth matching/non-elective contributions?

Some provisions of SECURE 2.0 have been delayed for implementation, but the guidance provides for this option to be applicable for the calendar year 2024. The SECURE 2.0 Act contains many changes to the qualified retirement plan landscape, and you should contact your trusted advisor at UHY to make sure your plan is set up properly to take advantage of these new provisions.