What are the difficulties with 60-something catch-up elective deferrals?

Some practitioners have suggested there might be practical difficulties about the SECURE 2.0 Act of 2022’s catch-up elective deferrals for ages 60, 61, 62, and 63.

Just curious, what are the practical difficulties?

My concerns revolve around participant education. I think the payroll vendors can figure out how to code their systems to allow deferrals to continue similar to age 50 catchups, but it will come with time, expense and plenty of mistakes for stopping a deferral when they should have continued. Some recordkeepers currently allow simultaneous elections (1) "regular" deferral (Pretax and/or Roth) (2) "catch up" deferral (pretax and/or Roth) that are withheld that the same time - I don't like that programing, I prefer one election that just continues if you are catch up eligible. So in this programming instance there will potentially be four elections (1) "regular" pretax (2) "regular" Roth (3) Age 50 catch up Roth (will an existing catch up pretax election automatically switch to Roth?? or is a new election required??) (4) Age 60-63 catch up Roth. 

Or for recordkeepers that just have one election on file, participants need to be educated about how to make a deferral election of non-catch up pretax/Roth and catch up Roth and the payroll systems need to be smart enough to handle it. I think this can be overcome, but from a participant election perspective, just sounds confusing and that will lead to mistakes.

WCC, thanks. Perhaps this is another set of tasks that call for integration of the payroll service provider's or paymaster's software with the recordkeeper's software.

I think they have made this needless complicated and introduced the potential for errors from: the participant, the payroll departments, the payroll company, the TPA, the custodian, and the educational materials and or deferral election forms and systems. That's not to say that these errors will happen but there is the potential for them at multiple steps in the process.

Don't forget the confusion that after age 63, the catch-up goes back the regular amount - so again the education for the participants.  Especially, when they complain they can't do the higher amounts they were doing.

The early-60s catch-up is for an “eligible participant who would attain age 60 but would not attain age 64 before the close of the taxable year[.]”

Ignoring complexities about whether a few participants might use a tax year that doesn’t end with December:

A software rule must look to what age a participant would attain by the year’s December 31, not what age a participant has attained when the system processes her deferral election.

And about explaining things:

An age 60 catch-up might begin for someone who is just barely past 59.

Here's an opinion on the other side of the ledger:

(1) The administrative details are handled by third party administrators and payroll systems, so the burden does not largely fall on employers.  Third party administrators handle participant communications.  They'll figure how to it efficiently.  This isn't rocket science compared to the rest of 401(k) plan administration.

(2) The change increases the incentives for some business owners (not just those currently ages 60-62 but those in their late fifties who are soon entering that age band) to implement 401(k) plans.

Pair those together and maybe Congress helped retirement plans with this provision.  It's at least an opinion worth considering instead of assuming that everything is "woe is us." 

My clients, whether plan sponsors or service providers, like the public policy of allowing bigger deferrals for early-60-somethings.

Rather, some plan sponsors (and some who advise them) are mindful of how much we ask of recordkeepers and third-party administrators.