Catch-ups and Roth availability

With the new rules, must plans allow all participants the ability to make Roth deferrals?  Or can a plan just have the Roth only for when it's required for catch-up?

41 minutes ago, BG5150 said:

With the new rules, must plans allow all participants the ability to make Roth deferrals? 

Yes

42 minutes ago, BG5150 said:

Or can a plan just have the Roth only for when it's required for catch-up?

No

From the Proposed Regs:

The proposed regulations would not require an applicable employer plan to include a qualified Roth contribution program. Thus, under the proposed regulations, an applicable employer plan that does not have a qualified Roth contribution program would be allowed to permit catch-up eligible participants who are not subject to the Roth catch-up requirement to make catch-up contributions even though catch-up eligible participants who are subject to the Roth catch-up requirement would not be permitted to make catch-up contributions.

From the JCS 1-23 page 527

In addition, if catch-up contributions are provided under a plan as designated Roth contributions for participants whose wages exceed $145,000, the plan must also permit catch-up contributions made by other eligible participants to be designated Roth contributions.

Stated another way - if you want catch-ups you have to allow ROTH; if you don't want ROTH you can't allow catch-ups.

Maybe I've got it all wrong, but I don't believe you are required to have Roth to allow catch-ups. It's just that if you don't have Roth, then the HPI's cannot do catch-ups. Am I missing something? 

1 hour ago, Belgarath said:

Maybe I've got it all wrong, but I don't believe you are required to have Roth to allow catch-ups. It's just that if you don't have Roth, then the HPI's cannot do catch-ups. Am I missing something? 

I agree with your interpretation. 

4 hours ago, Belgarath said:

Maybe I've got it all wrong, but I don't believe you are required to have Roth to allow catch-ups. It's just that if you don't have Roth, then the HPI's cannot do catch-ups. Am I missing something? 

You are correct. 

Prior to the proposed rule, a lot of people believed that in order to allow catch-up, you would need to allow Roth.  I think that's where the confusion is coming from.

That is correct. But see the following from the preamble to the Prop. Regs. There could be a discrimination issue if you have some NHCEs precluded from making a catch-up because they are subject to the Roth requirement. 

"Because the Roth catch-up wage threshold is slightly lower than the wage threshold used in the definition of highly compensated employee (HCE) under section 414(q)(1)(B), some nonHCEs may be subject to the Roth catchup requirement. Thus, if a plan that does not include a qualified Roth contribution program prohibits catch-up eligible participants who are subject to the Roth catch-up requirement from making catch-up contributions, while permitting other catch-up eligible participants to make catch-up contributions, then the outcome of the nondiscrimination test with respect to the availability of catch-up contributions performed under § 1.401(a)(4)–4 may be affected.

Accordingly, proposed § 1.414(v)– 2(b)(2) would permit such a plan to also preclude one or more catch-up eligible participants who are HCEs and who are not subject to the Roth catch-up requirement (for example, because they did not receive FICA wages for the preceding year) from making catch-up contributions if doing so facilitates satisfaction of § 1.401(a)(4)–4 with respect to the availability of catch-up contributions."

https://www.govinfo.gov/content/pkg/FR-2025-01-13/pdf/2025-00350.pdf

8 minutes ago, G8Rs said:

That is correct. But see the following from the preamble to the Prop. Regs. There could be a discrimination issue if you have some NHCEs precluded from making a catch-up because they are subject to the Roth requirement. 

Good point.  You CAN do it, but that doesn't mean that you should.  

FWIW, Im adding Roth and IPRR to all plans that allow catch-up.