Update: Age-Based Catchup Contributions Cleared for 2024
VRS emailed affected employers last month that we would not be able to offer 50+ Catch-Up contributions in 2024, due to implementation requirements of the federal SECURE 2.0 Act.
Last week, the IRS announced a delayed effective date to January 1, 2026, for one provision requiring that age-based catch-up contributions to Section 401(a) qualified plans, Section 403(b) and governmental 457(b) plans be made on a Roth after-tax basis for participants who earned more than $145,000 the previous year.
Therefore, contributions will continue as usual in 2024, allowing Commonwealth of Virginia 457 Deferred Compensation Plan participants nearing retirement to take full advantage of the catch-up option next year.
VRS will begin preparations for implementing this SECURE Act provision in 2025.
The Roth savings requirement tied to income affects the VRS-administered COV 457 Plan as well as defined contribution plans administered by individual employers, including other 457 plans and 403(b) plans. Tracking and routing catch-up contributions from participants making more than $145,000 in the previous year may require new programming for some payroll and record-keeping systems.
As a reminder, Hybrid Retirement Plan members’ voluntary contributions made to that plan also count toward the 457 contributions limit each year.