Washington, D.C. (July 10, 2025) – In a letter submitted to the Department of the Treasury and Internal Revenue Service (IRS), the American Institute of CPAs (AICPA) requested additional guidance related to catch-up contributions designated as Roth contributions within Section 603 of the SECURE 2.0 Act of 2022, which was signed into law as part of the Consolidated Appropriations Act of 2023. In January, 2025, Treasury and the IRS issued REG-101268-24, which included guidance reflecting the statutory changes made by section 603 of SECURE 2.0. Those changes include the requirement that catch-up contributions made by certain catch-up eligible participants must be designated as Roth contributions, otherwise referred to as the Roth mandate.
The Roth mandate affects certain employees participating in employer-sponsored retirement plans who are eligible to make catch-up contributions and whose wages meet a specific income threshold.
Safe harbor for Form W-2 reliance
The AICPA recommends that Treasury and the IRS create a safe harbor that allows plan administrators to rely on W-2 wage information when determining if employees exceed the catch-up wage threshold for the purposes of the Roth mandate. If such a safe harbor is unable to be adopted, clear guidance is suggested related to scenarios involving predecessor employers and other third-party arrangements, including relief for non-compliance that may result and otherwise be unavoidable in reasonable administration of plans using Form W-2 information for purposes of determining which employees are subject to the Roth mandate.
Application to disregarded entities
A disregarded entity with employees is generally required to file employment tax returns using its own employer identification number and is treated as an employer, regardless of its disregarded status for income tax purposes. The AICPA recommends that Treasury and the IRS articulate a position on whether a disregarded entity is treated as a separate “employer sponsoring the plan” for purposes of Prop. Reg. 1.414(v)-2(b)(3) and (4).
“Post-SECURE 2.0, employers and plan administrators will need clear guidance to ensure compliance of the law regarding Roth-mandated catch-up contributions,” says Kristin Esposito, AICPA Director, Tax Policy & Advocacy. “Our recommendations to the regulations proposed by Treasury and the IRS, if adopted, will make it easier for plan administrators to implement the law.”
About the American Institute of CPAs
The American Institute of CPAs (AICPA) is the world’s largest member association representing the CPA profession, with 397,000 members and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education, and consulting. A founding member of the Association of International Certified Professional Accountants, the AICPA sets ethical standards for the profession, attestation standards, and U.S. auditing standards for private companies, not-for-profit organizations, and federal, state, and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, partners across the profession to build future talent, and drives continuing education to advance the vitality, relevance, and quality of the profession.
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Contact: Veronica L. Vera
202-434-9215
Veronica.Vera@aicpa-cima.com