Transcript:

Domenique DiSilvio [00:00:14.519 --> 00:00:26.880] Hello, everyone. Thanks for joining us today. By now we all know that the SECURE 2.0 Act brought about many significant changes to employer sponsored retirement plans.

Domenique DiSilvio [00:00:27.175 --> 00:00:41.215] This is the first in a series of videos for us to discuss some of the key provisions of the act. Today we're going to be focusing on what we call the Rothification of catch up contributions. Beginning

Domenique DiSilvio [00:00:41.215 --> 00:00:46.525] next year, the act requires plans permitting catch up contributions

Domenique DiSilvio [00:00:46.880 --> 00:00:59.760] to classify those contributions as Roth contributions for any participants who earned over $145,000 dollars in this year 2023.

Domenique DiSilvio [00:00:59.760 --> 00:01:10.140] That means that this group of highly paid participants will no longer be able to make pre tax contributions to their retirement plans.

Domenique DiSilvio [00:01:10.585 --> 00:01:18.865] It also means that if you're a plan sponsor, and you've got a plan that allows catch up contributions, but

Domenique DiSilvio [00:01:19.165 --> 00:01:29.845] doesn't currently allow Roth contributions to the plan, that you will have to add the Roth contribution feature to your plan or you'll have to eliminate the catch up

Domenique DiSilvio [00:01:30.140 --> 00:01:44.925] contribution feature. Since we don't expect that many plan sponsors will want to eliminate the catch up contribution feature, we expect to see plans adding Roth and to see a lot more Roth contributions in the future.

Domenique DiSilvio [00:01:46.045 --> 00:02:00.715] Also, because this is a required provision, and it's one that presents some administrative challenges, plan sponsors will need to work hard this year to bring some changes to their current procedures.

Domenique DiSilvio [00:02:01.015 --> 00:02:04.615] They'll need to let the affected group of participants know,

Domenique DiSilvio [00:02:05.270 --> 00:02:15.420] they'll need to communicate directly with this group, and they'll need to have a way to collect their elections for Roth and catch up contributions.

Domenique DiSilvio [00:02:15.420 --> 00:02:30.390] You might be wondering how we think participants will receive this new news in general. And on the one hand, it does make more of their retirement savings immediately taxable. But, on the other hand,

Domenique DiSilvio [00:02:30.390 --> 00:02:37.020] it also should allow them greater flexibility in the future for retirement planning.

Domenique DiSilvio [00:02:37.020 --> 00:02:44.484] Thanks for joining us today.