Advice & Planning Insights Home Page

SECURE 2.0: Understanding Changes and Challenges to the New Catch-Up Provisions

This article was updated to reflect the announcement from the IRS regarding Section 603 of the Secure Act 2.0 on August 25th, 2023.

The SECURE 2.0 Act of 2022 (SECURE 2.0), signed into law by President Biden on December 29, 2022, and effective January 1, 2023, builds on and expands upon the most wide-sweeping retirement legislation passed in the US under the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. SECURE 2.0 consists of 92 new IRS and retirement plan changes to the SECURE Act of 2019.

Catch-Up Provision Changes

Employed taxpayers may be familiar with the ability to make “catch-up” contributions to a qualified retirement plan after reaching age 50, in addition to making contributions within specified limits. Starting in 2024, catch-up contributions to a 401(k), 403(b), or government 457(b) plan must be made as an after-tax Roth contribution by a plan participant who received Federal Insured Contribution Act (FICA) income greater than $145,000 (indexed for inflation) in the preceding year. Beginning January 1, 2024, Section 603 of SECURE 2.0 requires that after-tax dollars be used to make catch-up contributions in a Roth account for plan participants. Although these employees would no longer be able to take a tax deduction for catch-up contributions, up to an extra $7,500 for 2023, such contributions will grow tax-free and can be withdrawn tax-free during retirement.

Potential Issues

Several issues relating to Section 603 have been raised, ranging from a legislative “drafting error” to the time sponsors and recordkeepers need to update their systems to comply operationally with Section 603, which may delay or even prevent its implementation. With respect to the legislative drafting error, the American Retirement Association (ARA) first identified a drafting error in Section 603 in January 2023, just a few days after SECURE 2.0 had been signed into law by President Biden. The drafting error involves a key subparagraph—specifically, Subsection 402(g)(1)(C)—that was accidentally deleted from Section 603 by the legislative body in its haste to provide a conforming amendment to the legislation that could be signed into law.

Subsection 402(g)(1)(C) provided the ability to make catch-up contributions. Because this section of the tax code was removed, the ability to make catch-up contributions (pretax or Roth) beginning January 1, 2024, is now in question. The concern and unintended consequence is that without Subsection 402(g)(1)(C), Congress inadvertently, but technically, made any catch-up contributions illegal. To express its true legislative intent on the matter, Congress sent a letter to the Treasury Department at the end of May stating that this potential outcome was not Congress’ intent and that it would correct the error. Congress has yet to fix its mistake.

Meanwhile, because details are unclear as to how Section 603 can be implemented operationally, the ARA and more than 200 large employer retirement plan sponsors, recordkeepers, and payroll providers have sent a joint letter to the Treasury Department requesting a two-year delay for implementing Section 603 after-tax catch-up requirements before this provision of SECURE 2.0 becomes effective in 2024. Commenting on this joint letter sent to the Treasury Department, the National Association of Plan Advisors informed its members that “if relief from Section 603 compliance is not granted before the Fall 2023, many plan sponsors will be, as a practical matter, forced to eliminate all catch-up contributions in their retirement plans, at least until they get updated systems in place.”

In response to the numerous issues and concerns raised by Congress, the ARA, large employer-plan sponsors, and qualified plan administrators and other stakeholders regarding Section 603, as well as requests for statutory clarity and administrative relief, the Internal Revenue Service (IRS) announced on August 28, 2023, in Notice 2023-62, a 24-month administrative extension period, from January 1, 2024, until 2026, for implementing the new requirements under Section 603. Importantly, the IRS also clarified in Notice 2023-62 that employer-sponsored plans are not prohibited from allowing catch-up contributions for plan participants who are age 50 under Secure 2.0 after 2023. During the extension period the Treasury Department and the IRS plan to issue new guidance on Section 603.


Section 603 of SECURE 2.0 and its required tax on catch-up contributions for employees earning $145,000 or more per year must be resolved, but a new extended time frame has been provided to resolve the identified issues around Section 603. Also, the IRS has clarified that catch-up contributions may continue to be made after 2023 by employees aged 50 and older. Therefore, you can still take advantage of many planning opportunities under the SECURE Act of 2019 and SECURE 2.0 to optimize and preserve your retirement wealth. Please discuss your situation with a wealth advisor with Calamos Wealth Management and its Advanced Wealth Planning & Strategies team.

Download PDF

Speak With an Advisor

This material is distributed for informational purposes only. The information contained herein is based on internal research derived from various sources and does not purport to be statements of all material facts relating to the information mentioned, and while not guaranteed as to the accuracy or completeness, has been obtained from sources we believe to be reliable. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. The views and strategies described may not be suitable for all investors. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations. The opinions and views of third parties do not represent the opinions or views of Calamos Wealth Management LLC. Opinions referenced are as of the date of publication and are subject to change due to changes in the market, economic conditions, or changes in the legal and/or regulatory environment and may not necessarily come to pass. This information is provided for informational purposes only and should not be considered tax, legal, or investment advice.

Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended and/or undertaken by Calamos Wealth Management, LLC [“Calamos”]), or any non-investment related services, will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Calamos is neither a law firm, nor a certified public accounting firm, and no portion of its services should be construed as legal or accounting advice. Moreover, you should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment advice from Calamos. Please remember that it remains your responsibility to advise Calamos, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. A copy of our current written disclosure Brochure discussing our advisory services and fees is available upon request or at