Off Calendar: Secure 2.0 Roth Rules

[justatester]

If you have an off-calendar plan (3/1/2025-2/28/2026):

Plan Limit excess:  a High FICA person has $1000 that needs to be redesignated as Roth Catchup as of 2/28/2026, since it is considered a 2026 catchup, can the sponsor correct the w-2 (2027 w-2 has not been created)?

Or would it need to be corrected via 1099?

[Artie M]

Not sure how the timing rules work here.    See 1.414(v)-1(c)(3).   "For purposes of determining the maximum amount of permitted catch-up contributions for a catch-up eligible participant, the determination of whether an elective deferral is a catch-up contribution is made as of the last day of the plan year (or in the case of section 415, as of the last day of the limitation year), except that, with respect to elective deferrals in excess of an applicable limit that is tested on the basis of the taxable year or calendar year (e.g., the section 401(a)(30) limit on elective deferrals), the determination of whether such elective deferrals are treated as catch-up contributions is made at the time they are deferred."

Assuming 2026 is considered the year of deferral, it could be reported on the 2026 Form W-2.

 

[MDCPA]

I think whether a correction is needed will depend upon why the high FICA person has $1,000 required to be treated as catch-up contributions. Technically, the Roth catch-up requirement applies only to those contributions treated as catch-up due to deferrals in excess of the 402(g) limit. If a correction is needed, the W-2 and in-plan Roth conversion corrections are only available if the plan has implemented the "deemed Roth" provisions found in the regulations.