Two industry trade groups have approached the Treasury Department with a proposed fix for the snafu in SECURE 2.0 that mistakenly prevents participants in workplace retirement plans from making catch-up contributions.
The hullabaloo over the widely reported "technical glitch" stems from language that lawmakers inadvertently dropped from the final text of the massive legislation. The omission of a subparagraph in Section 603 of the law effectively eliminated the ability of participants in 401(k), 403(b) and 457(b) plans to make catch-up contributions, whether Roth or pretax, beginning in 2024.
The intent of the legislation was to require that all catch-up contributions to defined contribution plans be made on a Roth basis, except for those made by individuals making $145,000 or less in wages.
In separate letters to the Treasury Department on Tuesday, the National Association of Government Defined Contribution Administrators and the American Benefits Council asked the agency to issue guidance stating that it will apply the law as though the anticipated technical correction to the legislation had been made.
"This approach is reasonable, as the relevant lawmakers and their staff are aware of this technical error but may have difficulty finding a timely legislative vehicle to immediately advance such a correction," Matt Petersen, executive director of NAGDCA writes in the letter.
David Levine, a principal at Groom Law Group, said it was difficult to predict how long it may take Congress to make the needed technical correction given the debt ceiling and other issues facing lawmakers.
"At this moment, I wouldn't bank on seeing a technical corrections bill in the short term," Mr. Levine said.
