Bulletin No. 2025–40

HIGHLIGHTS

OF THIS ISSUE





Bulletin No. 2025–40

September 29, 2025

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

EMPLOYEE PLANS

Notice 2025-47, page 441.

This notice sets forth updates on the corporate bond monthly

yield curve, the corresponding spot segment rates for August

2025 used under § 417(e)(3)(D), the 24-month average segment rates applicable for September 2025, and the 30-year

Treasury rates, as reflected by the application of § 430(h)(2)

(C)(iv).

EMPLOYEE PLANS, INCOME TAX

T.D. 10033, page 411.

These final regulations provide guidance for retirement plans

that permit participants who have attained age 50 to make

additional elective deferrals (catch-up contributions) under section 414(v) of the Code. Specifically, these regulations amend

Finding Lists begin on page ii.

the regulations under sections 414(v), 401(k), and 403(b) to

reflect statutory changes made by section 603 of the SECURE

2.0 Act of 2022 (SECURE 2.0 Act), which require that catch-up

contributions made by certain catch-up eligible participants be

designated Roth contributions. These regulations also amend

the regulations under section 414(v) of the Code to reflect

the statutory changes made by sections 109 and 117 of the

SECURE 2.0 Act, which increase the catch-up contribution limits under section 414(v) of the Code in certain cases.

EXEMPT ORGANIZATIONS

Announcement 2025-26, page 444.

Revocation of IRC 501(c)(3) Organizations for failure to meet

the code section requirements. Contributions made to the

organizations by individual donors are no longer deductible

under IRC 170(b)(1)(A).

The IRS Mission

Provide America’s taxpayers top-quality service by helping

them understand and meet their tax responsibilities and

enforce the law with integrity and fairness to all.

Introduction

The Internal Revenue Bulletin is the authoritative instrument

of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service

and for publishing Treasury Decisions, Executive Orders, Tax

Conventions, legislation, court decisions, and other items of

general interest. It is published weekly.

It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application

of the tax laws, including all rulings that supersede, revoke,

modify, or amend any of those previously published in the

Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of

internal practices and procedures that affect the rights and

duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service

on the application of the law to the pivotal facts stated in

the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices,

identifying details and information of a confidential nature are

deleted to prevent unwarranted invasions of privacy and to

comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not have the

force and effect of Treasury Department Regulations, but they

may be used as precedents. Unpublished rulings will not be

relied on, used, or cited as precedents by Service personnel in

the disposition of other cases. In applying published rulings and

procedures, the effect of subsequent legislation, regulations,

court decisions, rulings, and procedures must be considered,

and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unless

the facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.

This part includes rulings and decisions based on provisions

of the Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.

This part is divided into two subparts as follows: Subpart A,

Tax Conventions and Other Related Items, and Subpart B,

Legislation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.

To the extent practicable, pertinent cross references to these

subjects are contained in the other Parts and Subparts. Also

included in this part are Bank Secrecy Act Administrative

Rulings. Bank Secrecy Act Administrative Rulings are issued

by the Department of the Treasury’s Office of the Assistant

Secretary (Enforcement).

Part IV.—Items of General Interest.

This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative index

for the matters published during the preceding months. These

monthly indexes are cumulated on a semiannual basis, and are

published in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

September 29, 2025 

Bulletin No. 2025–40

Part I

26 CFR 1.414(v)-1, 1.414(v)-2, 1.401(k)-1, and

1.403(b)-3

T.D. 10033

DEPARTMENT OF THE

TREASURY

Internal Revenue Service

26 CFR Part 1

Catch‑Up Contributions

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Final regulations.

SUMMARY: This document sets forth

final regulations that provide guidance for

retirement plans that permit participants

who have attained age 50 to make addi‑

tional elective deferrals that are catch-up

contributions. The regulations reflect stat‑

utory changes made by the SECURE 2.0

Act of 2022, including the requirement

that catch‑up contributions made by cer‑

tain catch-up eligible participants must be

designated Roth contributions. The regu‑

lations affect participants in, beneficiaries

of, employers maintaining, and adminis‑

trators of certain retirement plans.

DATES: Effective date: These regulations

are effective on November 17, 2025.

Applicability date: These regulations

generally apply with respect to contributions

in taxable years beginning after December

31, 2026. However, see §§1.401(k)‑1(f)(5)

(iii), 1.414(v)‑1(i)(2), and 1.414(v)‑2(e)(2)

and the Applicability Dates section later in

this preamble for additional details regard‑

ing applicability dates.

FOR FURTHER INFORMATION

CONTACT: Jessica S. Weinberger at

(202) 317‑6349 (not a toll‑free number) or

Christina M. Cerasale at (202) 317‑4102

(not a toll‑free number).

SUPPLEMENTARY INFORMATION:

Authority

This document sets forth amendments

to the Income Tax Regulations (26 CFR

part 1) under sections 401(k), 403(b),

and 414(v) of the Internal Revenue Code

(Code) relating to catch‑up contribu‑

tions. These final regulations are issued

by the Secretary of the Treasury or the

Secretary’s delegate (Secretary) under

the express delegations of authority in

sections 401(m)(9), 414(v)(7)(D), and

7805(a) of the Code.

Section 401(m)(9) provides, in part,

that “[t]he Secretary shall prescribe such

regulations as may be necessary to carry

out the purposes of [section 401(m) and

(k)].” Section 414(v)(7)(D) provides a spe‑

cific delegation of authority with respect

to the requirements of section 414(v)(7)

(A), stating, “[t]he Secretary may provide

by regulations that an eligible participant

may elect to change the participant’s elec‑

tion to make additional elective defer‑

rals if the participant’s compensation is

determined to exceed the limitation under

[section 414(v)(7)(A)] after the election

is made.” Section 7805(a) provides that

“the Secretary shall prescribe all needful

rules and regulations for the enforcement

of [the Code], including all rules and reg‑

ulations as may be necessary by reason of

any alteration of law in relation to internal

revenue.”

Background

This document sets forth amendments

to the Income Tax Regulations under sec‑

tion 414(v) of the Code. Section 414(v)

permits a retirement plan to allow catch‑up

eligible participants to make additional

elective deferrals that are catch‑up con‑

tributions and sets forth requirements

relating to those contributions.1 These

final regulations amend the regulations

under section 414(v) to reflect changes

to the catch‑up contribution requirements

for certain catch‑up eligible participants

pursuant to sections 109, 117, and 603 of

Division T of the Consolidated Appropria‑

tions Act, 2023, Public Law 117‑328, 136

Stat. 4459 (2022), known as the SECURE

2.0 Act of 2022 (SECURE 2.0 Act).

This document also sets forth conform‑

ing amendments to the regulations under

sections 401(k) and 403(b) of the Code

that reflect section 603 of the SECURE

2.0 Act.

I. General Statutory and Regulatory

Framework

Section 414(v)(1) of the Code pro‑

vides that an applicable employer plan

will not be treated as failing to meet any

requirement of the Code solely because

it permits an eligible participant to make

additional elective deferrals (as defined

in section 414(v)(6)(B)) in any plan year.

“Applicable employer plan” is defined

in section 414(v)(6)(A) to mean a quali‑

fied plan under section 401(a) (qualified

plan), a plan under which amounts are

contributed by an individual’s employer

for an annuity contract described in sec‑

tion 403(b) (section 403(b) plan), an eli‑

gible deferred compensation plan under

section 457 of an eligible employer

described in section 457(e)(1)(A) (eligible

governmental 457(b) plan),2 an arrange‑

ment meeting the requirements of sec‑

tion 408(k) (SEP arrangement), and an

arrangement meeting the requirements

of section 408(p) (SIMPLE IRA plan).

Under section 414(v)(5), an eligible par‑

ticipant is a participant who is generally

eligible to make elective deferrals under

an applicable employer plan, who would

attain age 50 by the end of the taxable

year, and with respect to whom no further

elective deferrals may (without regard to

section 414(v)) be made to the plan for

the plan year (or other applicable year) by

reason of a limitation or restriction listed

in section 414(v)(3) or a comparable lim‑

itation or restriction included in the terms

of the plan.

Existing §1.414(v)-1(g)(3) provides that an employee is a “catch-up eligible participant” for a taxable year if the employee is eligible to make elective deferrals under an applicable employer

plan (without regard to section 414(v) or §1.414(v)-1) and the employee’s fiftieth or higher birthday would occur before the end of the employee’s taxable year.

2

Section 414(v)(6)(C) provides that section 414(v) does not apply to a participant in an eligible governmental 457(b) plan for any year for which a higher limitation applies to the participant

under section 457(b)(3).

1

Bulletin No. 2025–40

411

September 29, 2025

Under section 414(v)(2)(A), the

amount of additional elective deferrals

that a plan may permit a participant to

make pursuant to section 414(v)(1) for a

taxable year is limited to the lesser of: (1)

the applicable dollar amount under sec‑

tion 414(v)(2)(B) (referred to as the appli‑

cable dollar catch‑up limit), and (2) the

excess (if any) of the participant’s com‑

pensation (as defined in section 415(c)

(3)) for the year over any other elective

deferrals of the participant for such year

that are made without regard to sec‑

tion 414(v). Section 414(v)(2)(B)(i) pro‑

vides the applicable dollar catch‑up limit

for an applicable employer plan other than

a plan described in section 401(k)(11)

(SIMPLE 401(k) plan) or a SIMPLE IRA

plan. Section 414(v)(2)(B)(ii) provides

the applicable dollar catch‑up limit for a

SIMPLE 401(k) plan or a SIMPLE IRA

plan (collectively referred to as SIMPLE

plans). Section 414(v)(2)(C) provides that

the applicable dollar catch‑up limits under

section 414(v)(2)(B)(i) and (ii) are subject

to annual adjustment based on changes

in the cost of living. Section 414(v)(2)

(D) provides that, for purposes of sec‑

tion 414(v)(2), all applicable employer

plans, other than eligible governmental

457(b) plans, that are maintained by the

same employer (as determined under sec‑

tion 414(b), (c), (m), or (o)) are treated as

a single plan, and all eligible governmen‑

tal 457(b) plans that are maintained by the

same employer are treated as a single plan.

Under section 414(v)(3)(A)(i), a

catch‑up contribution is not, with respect

to the year in which the contribution is

made, subject to certain otherwise appli‑

cable limitations, including those con‑

tained in section 401(a)(30) (limiting a

participant’s elective deferrals during a

calendar year to the amount permitted

under section 402(g)), section 403(b)

(including the requirement under sec‑

tion 403(b)(1)(E) that a contract pur‑

chased under a salary reduction agree‑

ment must meet the requirements of

section 401(a)(30)), and section 457(b)

(2) applied without regard to any

increase under section 457(b)(3) (limit‑

ing a participant’s elective deferrals for

a taxable year to the applicable dollar

amount in section 457(e)(15), or if less,

100 percent of the participant’s includi‑

ble compensation). Under section 414(v)

(3)(B), in the case of any catch‑up con‑

tribution to a plan, except as provided

in section 414(v)(4), the plan shall not

be treated as failing to meet the require‑

ments of sections 401(a)(4), 401(k)(3),

401(k)(11), 403(b)(12), 408(k), 410(b),

or 416 by reason of the making of (or the

right to make) the catch‑up contribution.

Section 414(v)(4) provides that an

applicable employer plan is treated as

failing to meet the nondiscrimination

requirements under section 401(a)(4) with

respect to benefits, rights, and features

unless the plan allows all catch‑up eligi‑

ble participants to make the same election

with respect to catch‑up contributions. For

purposes of section 414(v)(4), all plans

maintained by employers that are treated

as a single employer under section 414(b),

(c), (m), or (o) are treated as one plan

(with the exception of a plan described in

section 410(b)(6)(C)(i) for the duration

of the transition period described in sec‑

tion 410(b)(6)(C)(ii) with respect to that

plan).

Section 414(v) was added to the Code

by section 631 of the Economic Growth

and Tax Relief Reconciliation Act of

2001, Public Law 107‑16, 115 Stat. 38.

The Department of the Treasury (Treasury

Department) and the IRS issued compre‑

hensive regulations under section 414(v)

in 2003 (TD 9072, 68 FR 40510). Sub‑

sequently, provisions relating to catch‑up

contributions under section 414(v) were

incorporated into regulations under sec‑

tions 401(k), 403(b), and 457(b).

II. SECURE 2.0 Act Changes to

Section 414(v)

A. Section 109 of the SECURE 2.0 Act

For taxable years beginning after

December 31, 2024, section 109 of the

SECURE 2.0 Act amends section 414(v)

(2) of the Code to increase the applicable

dollar catch‑up limit under section 414(v)

(2)(B)(i) and (ii) in the case of a catch‑up

eligible participant who attains age 60, 61,

62, or 63 during the taxable year. For such

a participant in an applicable employer

plan other than a SIMPLE plan, the

increased applicable dollar catch‑up limit

is 150 percent of the otherwise applicable

dollar catch‑up limit under section 414(v)

(2)(B)(i) in effect for 2024.3 For such

a participant in a SIMPLE plan, the

increased applicable dollar catch‑up limit

is 150 percent of the otherwise applicable

dollar catch‑up limit under section 414(v)

(2)(B)(ii) in effect for 2025.4 In either

case, for a year beginning after December

31, 2025, the increased applicable dollar

catch‑up limit is subject to adjustment to

reflect changes in the cost of living, in

accordance with the last sentence of sec‑

tion 414(v)(2)(C).

B. Section 117 of the SECURE 2.0 Act

A SIMPLE plan is an alternative plan

design under which employees of an eligi‑

ble employer as defined in section 408(p)

(2)(C)(i) (that is, generally, an employer

that had no more than 100 employees who

received at least $5,000 of compensation

from the employer for the preceding cal‑

endar year) are permitted to elect to have

salary reduction contributions (or elec‑

tive contributions, in the case of a SIM‑

PLE 401(k) plan) made on their behalf.5

Among other things, section 117 of the

SECURE 2.0 Act amends section 414(v)

(2) of the Code to increase the applicable

Under section 414(v)(2)(E)(i), the adjusted annual limit on catch-up contributions that applies to an employee participating in an applicable employer plan other than a SIMPLE plan in a

year in which the employee attains age 60, 61, 62, or 63 is described as the greater of $10,000 or an amount equal to 150 percent of the otherwise applicable dollar catch-up limit under sec‑

tion 414(v)(2)(B)(i) in effect for 2024. However, the amount equal to 150 percent of the otherwise applicable dollar catch-up limit for 2025 ($11,250) is greater than $10,000, and this amount

will continue to be greater than $10,000 in future years.

4

Under section 414(v)(2)(E)(ii), the adjusted annual limit on catch-up contributions that applies to an employee participating in an applicable employer plan that is a SIMPLE plan in a year in

which the employee attains age 60, 61, 62, or 63 is described as the greater of $5,000 or an amount equal to 150 percent of the otherwise applicable dollar catch-up limit under section 414(v)

(2)(B)(ii) in effect for 2025. However, the amount equal to 150 percent of the otherwise applicable dollar catch-up limit for 2025 ($5,250) is greater than $5,000, and this amount will continue

to be greater than $5,000 in future years.

5

The annual limit on salary reduction contributions or elective contributions is lower for SIMPLE plans than for other types of plans. In addition, SIMPLE plans are not subject to nondis‑

crimination testing, and the employer must make certain contributions.

3

September 29, 2025

412

Bulletin No. 2025–40

dollar catch-up limit under section 414(v)

(2)(B)(ii) for SIMPLE plans sponsored

by certain eligible employers who are

described in section 408(p)(2)(E)(iv).6 The

increased applicable dollar catch-up limit

is available automatically to a SIMPLE

plan sponsored by an eligible employer

described in section 408(p)(2)(E)(iv)

that had no more than 25 employees who

received at least $5,000 of compensa‑

tion from the employer for the preceding

calendar year. Other eligible employers

described in section 408(p)(2)(E)(iv) may

make an election for the increased appli‑

cable dollar catch-up limit to apply and,

if the election is made, the employer must

make additional matching or nonelective

contributions.

The increased applicable dollar

catch-up limit, which applies to taxable

years beginning after December 31, 2023,

is 110 percent of the otherwise applicable

dollar catch-up limit under section 414(v)

(2)(B)(ii) for calendar year 2024. For a

year beginning after December 31, 2024,

the increased applicable dollar catch-up

limit is subject to adjustment to reflect

changes in the cost of living, in accor‑

dance with section 414(v)(2)(C)(ii).

C. Section 603 of the SECURE 2.0 Act

Section 603(a) of the SECURE 2.0 Act

amends section 414(v) of the Code to add

section 414(v)(7). Section 414(v)(7)(A)

sets forth the requirement that catch-up

contributions made by certain catch-up eli‑

gible participants must be designated Roth

contributions (the Roth catch-up require‑

ment). Specifically, under section 414(v)

(7)(A), in the case of a catch-up eligible

participant whose wages as defined in

section 3121(a) (that is, wages for pur‑

poses of the Federal Insurance Contribu‑

tions Act (FICA), codified at subtitle C,

chapter 21 of the Code, or FICA wages)

for the preceding calendar year from the

employer sponsoring the plan exceeded

$145,000, section 414(v)(1) applies only

if any catch-up contributions made by the

participant are designated Roth contribu‑

tions (as defined in section 402A(c)(1)).

Section 414(v)(7)(B) provides that, in

the case of an applicable employer plan

with respect to which section 414(v)(7)

(A) applies to any participant for a plan

year, section 414(v)(1) does not apply to

the plan unless the plan provides that any

catch-up eligible participant may make

catch-up contributions as designated Roth

contributions. Section 414(v)(7)(C) pro‑

vides that section 414(v)(7)(A) does not

apply to SEP arrangements or SIMPLE

IRA plans. Under section 414(v)(7)(D),

the Secretary may issue regulations pro‑

viding that a catch-up eligible participant

may elect to change the participant’s elec‑

tion to make catch-up contributions if the

participant’s compensation is determined

to exceed the wage limitation under sec‑

tion 414(v)(7)(A) after the election is

made. Under section 414(v)(7)(E), for

taxable years beginning after December

31, 2024, the wage limitation is adjusted

for changes in the cost of living (the wage

limitation, as adjusted, is referred to as the

Roth catch-up wage threshold).7

Section 603(b) of the SECURE 2.0 Act

includes conforming amendments with

respect to section 603(a). Section 603(b)

(1) of the SECURE 2.0 Act strikes sec‑

tion 402(g)(1)(C) of the Code. Prior to

its elimination, section 402(g)(1)(C) pro‑

vided that a catch-up eligible participant’s

gross income did not include elective

deferrals in excess of the applicable dollar

amount under section 402(g)(1)(B) to the

extent that the amount of those elective

deferrals did not exceed the applicable

dollar catch-up limit under section 414(v)

(2)(B)(i) for the taxable year (without

regard to the treatment of the elective

deferrals by an applicable employer plan

under section 414(v)).

Section 603(b)(2) of the SECURE

2.0 Act amends section 457(e)(18)(A)

(ii) of the Code and, pursuant to this

amendment, if a catch‑up eligible partic‑

ipant’s limit under section 457(e)(18) is

greater than the limit under section 457(b)

(3) (determined without regard to sec‑

tion 457(e)(18)), then a portion of the

catch‑up contributions made to the eligi‑

ble governmental 457(b) plan by the par‑

ticipant is required to be designated Roth

contributions. The portion of the catch‑up

contributions that is subject to this Roth

requirement is the amount by which the

sum of the limits under sections 457(b)(2)

and 414(v)(2)(B)(i) exceeds the maximum

permitted contribution set forth in sec‑

tion 457(b)(3) (determined without regard

to section 457(e)(18)).

Under section 603(c) of the SECURE

2.0 Act, the amendments made by sec‑

tion 603 of the SECURE 2.0 Act apply

to taxable years beginning after Decem‑

ber 31, 2023.

III. Notice 2023-62

In August 2023, the Treasury Depart‑

ment and the IRS issued Notice 2023-62,

2023-37 IRB 817. Notice 2023-62 clar‑

ifies that, despite the elimination of sec‑

tion 402(g)(1)(C) of the Code under sec‑

tion 603(b)(1) of the SECURE 2.0 Act,

applicable employer plans may, for tax‑

able years beginning after December 31,

2023, continue to permit catch-up eligi‑

ble participants to make elective deferrals

that exceed the applicable dollar amount

under section 402(g)(1)(B) of the Code (or

deferrals that exceed the applicable dollar

amount under section 457(e)(15)) if those

contributions in excess of the applicable

dollar amount satisfy the requirements

for catch-up contributions under sec‑

tion 414(v). In addition, pursuant to Notice

2023-62, the first two taxable years begin‑

ning after December 31, 2023, are regarded

as an administrative transition period with

respect to the Roth catch-up requirement.

During the administrative transition period,

catch-up contributions made by a partic‑

ipant who is subject to the Roth catch-up

requirement will be treated as satisfying the

requirements of section 414(v)(7)(A), even

if the contributions are not designated Roth

contributions.

An eligible employer is described in section 408(p)(2)(E)(iv) if, during the three-taxable-year period preceding the first year that the employer maintained the SIMPLE plan, the employer

(including any member of the employer’s controlled group or any predecessor of the employer or member of its controlled group) has not established or maintained a qualified plan, a sec‑

tion 403(a) annuity plan, or a section 403(b) plan under which contributions were made or benefits were accrued for substantially the same employees as the employees eligible to participate

in the SIMPLE plan. See Q&A E-1 in Notice 2024-2, 2024-2 IRB 316.

7

The adjustments are to be made in the same manner as adjustments under section 415(d)(1)(A) (including that any increase which is not a multiple of $5,000 is rounded to the next lower

multiple of $5,000), except that the base period is the calendar quarter beginning July 1, 2023.

6

Bulletin No. 2025–40

413

September 29, 2025

Notice 2023-62 also summarizes

anticipated guidance from the Treasury

Department and the IRS with respect to

the implementation of section 603 of the

SECURE 2.0 Act as follows: (1) the Roth

catch-up requirement would not apply in

the case of a catch-up eligible participant

who did not have FICA wages for the pre‑

ceding calendar year from the employer

sponsoring the plan; (2) in the case of a

catch-up eligible participant who is sub‑

ject to the Roth catch-up requirement,

a plan administrator and an employer

would be permitted to treat an election

by the participant to make catch-up con‑

tributions on a pre-tax basis as an elec‑

tion by the participant to make catch-up

contributions that are designated Roth

contributions; and (3) a catch-up eligible

participant’s FICA wages for the preced‑

ing calendar year from one participat‑

ing employer in an applicable employer

plan that is maintained by more than one

employer (including a multiemployer

plan) would not be aggregated with the

participant’s FICA wages for the preced‑

ing calendar year from another partici‑

pating employer in the plan for purposes

of determining whether the participant’s

FICA wages for that year exceeded the

Roth catch-up wage threshold. The

notice requested comments with respect

to the anticipated guidance summarized

in the notice, additional matters under

consideration relating to a plan without

a qualified Roth contribution program,

and, more generally, the provisions of

section 603 of the SECURE 2.0 Act.

IV. Proposed Regulations

A notice of proposed rulemaking

(REG‑101268‑24) containing proposed

regulations that would amend the reg‑

ulations under sections 401(k), 403(b),

and 414(v) to reflect changes to the

catch-up contribution requirements for

certain catch-up eligible participants pur‑

suant to sections 109, 117, and 603 of the

SECURE 2.0 Act was published in the

Federal Register on January 13, 2025 (90

FR 2645). Comments received in response

to Notice 2023-62 were considered in the

preparation of the proposed regulations.

Nineteen comments were received on the

proposed regulations, and a public hearing

was held on April 7, 2025.

September 29, 2025

After consideration of the comments

received in response to the notice of pro‑

posed rulemaking and testimony at the

public hearing, the proposed regulations

are adopted by this Treasury decision with

certain changes described in the Summary

of Comments and Explanation of Revi‑

sions section of this preamble.

Summary of Comments and

Explanation of Revisions

This Summary of Comments and

Explanation of Revisions addresses the

significant comments regarding catch‑up

contributions under section 414(v) of the

Code that the Treasury Department and

the IRS received in response to the pro‑

posed regulations and describes the revi‑

sions included in the final regulations.

Rules under the proposed regulations that

are included in the final regulations with‑

out change generally are not discussed in

this Summary of Comments and Explana‑

tion of Revisions.

I. Amendments to Regulations Under

Sections 401(k) and 403(b) – Deemed

Roth Catch-up Election

In order to facilitate compliance

with the Roth catch‑up requirement

under section 414(v)(7)(A), proposed

§1.401(k)-1(f)(5)(iii) generally would

permit a plan to provide, for taxable years

beginning after December 31, 2023, that

a participant who is subject to the Roth

catch-up requirement is deemed to have

irrevocably designated any catch-up con‑

tributions as designated Roth contribu‑

tions in accordance with the requirements

of existing §1.401(k)-1(f)(1)(i). How‑

ever, in accordance with section 414(v)

(7)(D), proposed §1.401(k)‑1(f)(5)(iv)

would provide that the application of a

deemed Roth catch-up election to a par‑

ticipant would be conditioned on the

participant having an effective oppor‑

tunity (determined in accordance with

existing §1.401(k)‑1(e)(2)(ii), which

applies a facts and circumstances test)

to make a new election that is different

than the deemed election. The proposed

regulations also proposed to amend

§1.403(b)‑3(c)(1) to incorporate pro‑

posed §1.401(k)-1(f)(5)(iii) and (iv),

among other provisions.

414

Commenters requested that the final

regulations permit a plan to continue

applying a deemed Roth catch‑up election

to a participant in certain circumstances in

which the participant is no longer subject

to the Roth catch-up requirement. One

commenter requested that, in the case of

a participant who ceases to be subject to

the Roth catch-up requirement during a

taxable year due to a transfer of employ‑

ment to another participating employer, a

plan be permitted to continue applying the

deemed Roth catch‑up election to the par‑

ticipant until the end of the taxable year.

Similarly, commenters requested that the

final regulations permit a plan to con‑

tinue applying the deemed Roth catch‑up

election to a participant for a taxable year

based on the FICA wages reported on

the participant’s Form W‑2 (Wage and

Tax Statement) for the preceding calen‑

dar year, even if the participant’s FICA

wages for the preceding calendar year are

later determined not to exceed the Roth

catch‑up wage threshold.

In response to these comments, the

final regulations clarify the conditions

set forth in proposed §1.401(k)‑1(f)(5)

(iv) by providing that the deemed election

described in §1.401(k)‑1(f)(5)(iii) must

cease to apply to an employee within a

reasonable period of time following the

date on which: (1) the employee ceases

to be subject to the requirement under

section 414(v)(7) to make any catch-up

contributions as designated Roth contri‑

butions, or (2) an amended Form W-2 is

filed or furnished to the employee indi‑

cating that the employee is not subject to

the requirement under section 414(v)(7) to

make any catch-up contributions as des‑

ignated Roth contributions. Accordingly,

catch‑up contributions that were desig‑

nated as Roth contributions pursuant to

the deemed election before the end of the

reasonable period of time referred to in the

prior sentence do not need to be recharac‑

terized as pre-tax catch-up contributions.

One commenter requested clarification

regarding the effective opportunity require‑

ment under proposed §1.401(k)‑1(f)(5)

(iv), including whether a notice require‑

ment applies and how any notice require‑

ment could be satisfied. The final regula‑

tions retain the proposed rule providing

that whether a participant has an effective

opportunity is determined under existing

Bulletin No. 2025–40

§1.401(k)‑1(e)(2)(ii), which applies a

facts and circumstances test. However, the

determination of whether certain facts and

circumstances would satisfy the require‑

ments of §1.401(k)‑1(e)(2)(ii) is outside

the scope of the final regulations.

One commenter requested that the

final regulations permit a plan to apply a

deemed Roth catch‑up election to a partic‑

ipant who is subject to the Roth catch‑up

requirement if the participant’s elective

deferrals for the taxable year have reached

the section 401(a)(30) limit without regard

to any designated Roth contributions that

the participant made earlier in the taxable

year.

The final regulations retain the pro‑

posed rule that a plan may provide that

an employee who is subject to the Roth

catch‑up requirement is deemed to have

irrevocably designated any elective defer‑

rals that are catch-up contributions as des‑

ignated Roth contributions. As described

in section III.B.1 of this Summary of

Comments and Explanation of Revisions

(“Designated Roth contributions that are

treated as catch-up contributions for pur‑

poses of the Roth catch-up requirement”),

the final regulations also retain the pro‑

posed rule in §1.414(v)-2(b)(1), which

provides that an elective deferral that is

treated as a catch-up contribution at the

time of deferral (for example, an elective

deferral that is a catch-up contribution

because it exceeds the section 401(a)(30)

limit on elective deferrals) is required to

be a designated Roth contribution only

to the extent the participant has not pre‑

viously made elective deferrals that are

designated Roth contributions during the

taxable year equal to the applicable dol‑

lar catch-up limit under §1.414(v)-1(c)

(2). However, this commenter’s request

to be permitted to deem elective deferrals

as designated Roth contributions once

total elective deferrals have reached the

section 401(a)(30) limit has been incorpo‑

rated into the final rules in §1.414(v)‑2(c)

(3)(i)(B) regarding the practices and pro‑

cedures that are necessary in order for a

plan to use the Form W‑2 or in‑plan Roth

rollover correction method to correct a

pre‑tax elective deferral that exceeds a

statutory limit, as explained further in

sections III.B.1 and III.C.3.a of this Sum‑

mary of Comments and Explanation of

Revisions (“Prerequisite to correct certain

Bulletin No. 2025–40

section 414(v)(7) failures under the new

correction methods”).

One commenter requested that a plan

be permitted to apply a deemed Roth

catch‑up election in the case of a partic‑

ipant who is permitted under the plan to

make a separate election to treat a portion

of the participant’s elective deferrals as

catch-up contributions during each payroll

period without regard to whether the par‑

ticipant has already made elective defer‑

rals equal to the section 401(a)(30) limit

(referred to as a separate election plan).

Assuming this deeming is permitted, the

commenter also requested that no correc‑

tion be required if such an elective defer‑

ral is deemed to be made as a designated

Roth contribution but is later determined

not to be a catch‑up contribution.

Under existing §1.414(v)‑1(c)(3),

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

(for example, 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. Thus, an additional

elective deferral that exceeds an employ‑

er-provided limit (for example, a plan limit

on the amount of a participant’s compen‑

sation that may be deferred for each pay‑

roll period) would not be determined to be

a catch-up contribution under the existing

regulations until the last day of the plan

year (regardless of any earlier treatment as

catch-up contributions pursuant to a par‑

ticipant election). The final regulations do

not make changes to §1.414(v)‑1(c)(3).

However, for a separate election plan

(including a plan utilizing the prora‑

tion-of-limit design described in existing

§1.414(v)-1(e)(1)(ii)(A)), §1.401(k)-1(f)

(5)(v) of the final regulations permits the

plan to apply a separate-election deemed

Roth catch‑up election to a participant’s

elective deferrals that the participant elects

to treat as catch-up contributions. As with

any application of a deemed Roth catch-up

election to a participant, the application

in this case would be conditioned on the

participant having an effective opportu‑

415

nity (determined in accordance with exist‑

ing §1.401(k)‑1(e)(2)(ii)) to make a new

election that is different than the deemed

election. Thus, in the case of a participant

who is made subject to a separate-election

deemed Roth catch-up contribution elec‑

tion and does not make a different elec‑

tion, the plan is not required to recharac‑

terize as pre-tax any of the participant’s

elective deferrals treated as Roth catch-up

contributions pursuant to the deemed Roth

election, even if these amounts are deter‑

mined not to be catch-up contributions

under §1.414(v)-1(c)(3).

One commenter requested that the final

regulations provide guidance on whether,

in order to apply a deemed Roth catch‑up

election to a participant, the deemed Roth

catch‑up election must be set forth in a

plan amendment (and, if so, requested

additional time following the publication

of the final regulations for an employer

to adopt the plan amendment). Under the

final regulations, as under the proposed

regulations, a plan generally may provide

that an employee who is subject to the

Roth catch‑up requirement is deemed to

have irrevocably designated any elective

deferrals that are catch-up contributions

as designated Roth contributions. Thus, in

order for a plan to apply a deemed Roth

catch‑up election to a participant, the

deemed Roth catch‑up election must be

set forth in the plan document.

Although the final regulations do not

address the deadline for this plan amend‑

ment, under Q&A J‑1 of Notice 2024‑2,

the deadline under section 501 of the

SECURE 2.0 Act to amend a plan (for

required, integral, and discretionary plan

amendments) with respect to the appli‑

cable provisions of section 603 of the

SECURE 2.0 Act, or any regulations there‑

under, generally is extended to Decem‑

ber 31, 2026. Further extensions apply in

the case of: (1) a qualified plan that is an

applicable collectively bargained plan or

a governmental plan within the meaning

of section 414(d); (2) a section 403(b)

plan that is an applicable collectively bar‑

gained plan of a tax‑exempt organization

described in section 501(c)(3) of the Code

or maintained by a public school; or (3) an

eligible governmental 457(b) plan.

While proposed §1.401(k)-1(f)(5)(iii)

would permit a deemed Roth election with

respect to a participant who is subject to

September 29, 2025

the Roth catch‑up requirement, the pro‑

posed regulations did not include a rule

permitting a plan to require that all par‑

ticipants’ catch‑up contributions be desig‑

nated Roth contributions. Footnote 16 of

the preamble to the proposed regulations

explained that, for a participant who is

not subject to the Roth catch‑up require‑

ment, allowing a plan design that requires

all participants’ catch‑up contributions to

be designated Roth contributions would

be inconsistent with the language of sec‑

tion 402A(b)(1), which provides that a

designated Roth contribution must be

elected by an employee “in lieu of all or a

portion of elective deferrals the employee

is otherwise eligible to make.”8

Notwithstanding the explanation in

footnote 16 of the preamble to the pro‑

posed regulations, commenters requested

that the final regulations permit a plan

to require that all participants’ catch‑up

contributions be made as designated Roth

contributions, regardless of a participant’s

FICA wages for the preceding calendar

year. Commenters argued that permitting

this plan design would simplify imple‑

mentation of the Roth catch‑up require‑

ment, would reduce section 414(v)(7)

failures, and, in some cases, could avoid

a perception of unfairness (for example, in

the case of a participant who is not subject

to the Roth catch‑up requirement under

section 414(v)(7)(A) because the partici‑

pant did not have FICA wages in the prior

year, but had wages from self‑employ‑

ment for the preceding calendar year that

exceeded the Roth catch-up wage thresh‑

old). With respect to section 402A(b)(1),

commenters argued that provision merely

defines the term “qualified Roth contribu‑

tion program,” does not explicitly prohibit

a plan from requiring that all catch‑up

contributions be made as designated Roth

contributions, and permits an employee to

have designated Roth contributions “made

on the employee’s behalf” under the plan.

The Treasury Department and the

IRS do not agree with the commenters’

characterization of the language in sec‑

tion 402A(b)(1) as merely a definition. In

addition, the language of section 402A(b)

(1) permitting an employee to have des‑

ignated Roth contributions “made on

the employee’s behalf” under a plan

was added to section 402A(b)(1) by sec‑

tion 604(b) of the SECURE 2.0 Act. Sec‑

tion 604 of the SECURE 2.0 Act permits

certain nonelective contributions and

matching contributions that are made after

December 29, 2022, to be designated Roth

contributions. Thus, this language reflects

the distinction between designated Roth

contributions that are made in lieu of pretax elective deferrals and those that are

made in lieu of nonelective or matching

contributions.

Further, section 414(v)(7)(A) refers to

designated Roth contributions as defined

under section 402A(c)(1), and, under

section 402A(c)(1), the term “designated

Roth contribution” includes “any elective

deferral…which is excludable from gross

income of an employee without regard to

[section 402A], and the employee desig‑

nates (at such time and in such manner

as the Secretary may prescribe) as not

being so excludable.” Thus, under sec‑

tion 402A(c)(1), an employee must be

permitted to make a pre-tax elective defer‑

ral in order for the employee to designate

such a pre‑tax elective deferral as a desig‑

nated Roth contribution.

Although the requirement under

section 402A(b)(1) and (c)(1) that an

employee be eligible to make pre‑tax elec‑

tive deferrals in order to elect to make des‑

ignated Roth contributions in lieu of all or

a portion of those pre‑tax elective deferrals

is not consistent with the Roth catch‑up

requirement under section 414(v)(7)(A)

in the case of a participant who is subject

to the Roth catch‑up requirement, final

regulation §1.414(v)‑2(b)(6) resolves this

inconsistency by providing that the Roth

catch-up requirement applies notwith‑

standing section 402A(b)(1) and (c)(1).

However, there is no inconsistency in the

case of a participant who is not subject to

the Roth catch‑up requirement. Accord‑

ingly, the final regulations do not include

a rule permitting a plan to require that all

participants’ catch‑up contributions be

designated Roth contributions.

II. Revisions to §1.414(v)-1

A. Increased applicable dollar catch-up

limit during the year of attainment of age

60 through 63 under section 109 of the

SECURE 2.0 Act

The proposed regulations gener‑

ally would retain the existing rules in

§1.414(v)‑1(c)(2)(i) and (ii) setting forth

the applicable dollar catch‑up limit that

applies to a catch‑up eligible participant in

an applicable employer plan that is not a

SIMPLE plan and a catch‑up eligible par‑

ticipant in a SIMPLE plan, respectively (to

be adjusted annually under §1.414(v)‑1(c)

(2)(iii) for changes in the cost of liv‑

ing). In accordance with section 109 of

the SECURE 2.0 Act, for a taxable year

beginning after 2024, the proposed regu‑

lations also noted the existence of a higher

applicable dollar catch‑up limit for an

individual attaining age 60, 61, 62, or 63

that is 150 percent of the applicable dollar

catch‑up limit that applies to the individ‑

ual under §1.414(v)‑1(c)(2)(i) or (ii) (as

applicable) during a taxable year begin‑

ning in 2024, adjusted for changes in the

cost of living for years after 2025.

Some commenters asked that the

Treasury Department and the IRS clar‑

ify whether a plan term that incorporates

the catch-up contribution limit under sec‑

tion 414(v) of the Code by reference also

incorporates the optional higher catch-up

contribution limit for participants attain‑

ing age 60, 61, 62, or 63 permitted under

section 414(v)(2)(B)(i) and (ii) in accor‑

dance with section 109 of the SECURE

2.0 Act. The Treasury Department and the

IRS expect that a plan’s terms will be made

clear as to whether or not a reference to

the catch-up contribution limit under sec‑

tion 414(v) in the plan document includes

the optional higher limit for participants

attaining age 60, 61, 62, or 63. This ensures

that a plan is operated in accordance with

its terms. See Q&A J‑1 of Notice 2024‑2

for a discussion of the deadline under sec‑

tion 501 of the SECURE 2.0 Act to adopt a

plan amendment with respect to a provision

of the SECURE 2.0 Act.

Section 402A(b)(1) provides that “[t]he term ‘qualified Roth contribution program’ means a program under which an employee may elect to make, or to have made on the employee's behalf,

designated Roth contributions in lieu of all or a portion of elective deferrals the employee is otherwise eligible to make, or of matching contributions or nonelective contributions which may

otherwise be made on the employee's behalf, under the applicable retirement plan.”

8

September 29, 2025

416

Bulletin No. 2025–40

One commenter requested that the final

regulations permit the increased catch‑up

contribution limit to continue until at least

the taxable year in which a catch‑up eli‑

gible participant attains age 65. The final

regulations do not incorporate this com‑

ment because, pursuant to section 414(v)

(2)(B)(i) and (ii), the higher catch-up con‑

tribution limits under section 414(v)(2)(E)

apply only to a catch-up eligible partici‑

pant “who would attain age 60 but would

not attain age 64 before the close of the

taxable year.”

Another commenter requested con‑

firmation that catch‑up eligible partic‑

ipants attaining age 60, 61, 62, or 63

who are eligible to make special sec‑

tion 403(b) catch‑up contributions are

permitted to make those contributions in

addition to catch-up contributions under

section 414(v), as increased under sec‑

tion 414(v)(2)(E). As explained in sec‑

tion III.B.3 of this Summary of Comments

and Explanation of Revisions (“Coordina‑

tion with other catch-up contributions”),

the catch‑up contributions described in

section 414(v) may apply in a year in

which a participant also qualifies for the

special section 403(b) catch‑up contri‑

butions. Thus, the Treasury Department

and the IRS agree that catch‑up eligible

participants attaining age 60, 61, 62, or

63 who are eligible to make the special

section 403(b) catch‑up contributions are

permitted to make those contributions in

addition to catch-up contributions under

section 414(v), as increased under sec‑

tion 414(v)(2)(E).

B. Interaction of the adjusted applicable

dollar catch-up limits under sections 109

and 117 of the SECURE 2.0 Act

In accordance with section 117 of the

SECURE 2.0 Act, for a taxable year begin‑

ning in 2024, proposed §1.414(v)‑1(c)(2)

(ii)(C) would set forth a higher applica‑

ble dollar catch‑up limit for a participant

in a SIMPLE plan that is sponsored by

an eligible employer described in sec‑

tion 408(p)(2)(E)(iv) of the Code and

for which the higher applicable dollar

catch‑up limit under section 414(v)(2)(B)

(iii) applies automatically or by election.

The higher applicable dollar catch‑up

limit under proposed §1.414(v)‑1(c)(2)(ii)

(C) would be 110 percent of the applica‑

Bulletin No. 2025–40

ble dollar catch‑up limit that applied to the

individual under proposed §1.414(v)‑1(c)

(2)(ii)(A) during a taxable year beginning

in 2024. For taxable years after 2024,

proposed §1.414(v)‑1(c)(2)(iii)(C) would

provide that this higher applicable dollar

catch‑up limit is to be adjusted for changes

in the cost of living.

With respect to an individual who

attains age 60 through 63 in a year in

which the individual participates in a

SIMPLE plan to which the higher appli‑

cable dollar catch‑up limit under sec‑

tion 117 of the SECURE 2.0 Act applies,

commenters requested that the final regu‑

lations clarify whether the SIMPLE plan

may provide that the applicable dollar

catch‑up limit that applies to the indi‑

vidual is an amount equal to the general

applicable dollar catch‑up limit for SIM‑

PLE plans under section 414(v)(2)(B) of

the Code, increased pursuant to section

109 of the SECURE 2.0 Act to an amount

equal to 150% of the applicable dollar

catch-up limit that would otherwise be in

effect and increased further pursuant to

section 117 of the SECURE 2.0 Act to an

amount equal to 110% of the applicable

dollar catch-up limit that would otherwise

be in effect. As in the proposed regula‑

tions, §1.414(v)‑1(c)(2)(ii)(C) in the final

regulations provides that the 10% increase

under section 117 of the SECURE 2.0 Act

applies to the applicable dollar catch‑up

limit in effect under §1.414(v)‑1(c)(2)

(ii)(A). Section 1.414(v)‑1(c)(2)(ii)(A)

sets forth the otherwise applicable dollar

catch‑up limit for SIMPLE plans, without

regard to the higher limit under section 109

of the SECURE 2.0 Act (which is set forth

in §1.414(v)‑1(c)(2)(ii)(B)). Thus, under

the final regulations, the 10% increase

under section 117 of the SECURE 2.0

Act applies only to participants in affected

SIMPLE plans who are not permitted to

make the increased catch‑up contributions

under section 109 of the SECURE 2.0 Act.

Section 414(v)(2)(B)(iii) of the Code

provides that the higher limit pursuant to

section 117 of the SECURE 2.0 Act is “an

amount equal to 110 percent of the dol‑

lar amount in effect under [section 414(v)

(2)(B)(ii) of the Code] for calendar year

2024.” Since section 109 of the SECURE

2.0 Act is effective for taxable years

beginning after December 31, 2024, the

50% increase for individuals attaining

417

age 60 through 63 did not apply for cal‑

endar year 2024, and the dollar amount

in effect under section 414(v)(2)(B)(ii) of

the Code for calendar year 2024 was the

same for all catch-up eligible individu‑

als. Thus, the applicable dollar amount

under section 414(v)(2)(B)(iii) for calen‑

dar year 2024 did not take into account

the 50% increase under section 109 of the

SECURE 2.0 Act. Similarly, the applica‑

ble dollar amount that applies under sec‑

tion 414(v)(2)(B)(iii) of the Code for any

calendar year after 2024 does not reflect

the 50% increase under section 109 of the

SECURE 2.0 Act.

Although a SIMPLE plan cannot pro‑

vide for an applicable dollar catch‑up

limit that reflects increases under both sec‑

tions 109 and 117 of the SECURE 2.0 Act,

a SIMPLE plan that generally provides

for the 10% increase under section 117

of the SECURE 2.0 Act may provide that

the 50% increase under section 109 of

the SECURE 2.0 Act applies instead to

a participant in a year in which the par‑

ticipant attains age 60 through 63. This

is because section 414(v)(2)(B)(ii) of the

Code provides that the applicable dollar

catch‑up limit that applies to a SIMPLE

plan participant for a year is the general

applicable dollar catch-up limit or, where

applicable, the adjusted applicable dollar

catch‑up limit for individuals attaining

age 60 through 63, “except as provided

in section 414(v)(2)(B)(iii).” The Trea‑

sury Department and the IRS interpret

that exception to apply only if applying

section 414(v)(2)(B)(iii) would increase

the applicable dollar catch‑up limit for a

participant. Thus, beginning with the 2025

calendar year, a SIMPLE plan that is gen‑

erally subject to the 10% increase under

section 117 of the SECURE 2.0 Act may

instead permit participants attaining age

60 through 63 to contribute catch-up con‑

tributions up to an amount equal to 150%

of the applicable dollar catch-up limit that

would otherwise be in effect (pursuant to

section 109).

C. Different applicable dollar catch-up

limits and universal availability

In accordance with the universal avail‑

ability requirement in section 414(v)(4)

of the Code, existing §1.414(v)-1(e)(1)

(i) sets forth a general rule that an appli‑

September 29, 2025

cable employer plan that offers catch-up

contributions and that is otherwise subject

to section 401(a)(4) (including a plan that

is subject to section 401(a)(4) pursuant

to section 403(b)(12)) will not satisfy the

requirements of section 401(a)(4) unless

all catch-up eligible participants who par‑

ticipate under any applicable employer

plan maintained by the employer are

provided with an effective opportunity to

make the same dollar amount of catch-up

contributions.

The proposed regulations did not pro‑

pose to amend the general rule set forth

in §1.414(v)-1(e)(1)(i) of the existing

regulations. However, the preamble to

the proposed regulations explained that

the Treasury Department and the IRS

do not believe that a plan should fail to

satisfy the universal availability require‑

ment merely because the plan utilizes the

increased limit for catch-up eligible par‑

ticipants attaining age 60 through 63 that

is permitted under section 414(v)(2)(E).

Thus, proposed §1.414(v)-1(e)(1)(iii)

would provide an exception to the gen‑

eral rule in §1.414(v)‑1(e)(1)(i) if each

catch-up eligible participant who partici‑

pates under any applicable employer plan

maintained by an employer is permitted

to make elective deferrals up to the statu‑

tory maximum dollar amount of catch-up

contributions permitted with respect to

the participant under section 414(v).

Under this new exception, an applicable

employer plan would not fail to satisfy

the requirements of section 401(a)(4)

merely because the plan allows catch-up

eligible participants who are subject to

the increased applicable dollar catch-up

limit for participants attaining age 60

through 63 under section 414(v)(2)(E)

to make catch-up contributions up to

that increased limit, while permitting

other catch-up eligible participants to

make catch-up contributions only up to

the applicable dollar catch-up limit that

applies generally under section 414(v)(2)

(B)(i) or (ii), as applicable.9

One commenter requested that the

final regulations clarify that an applicable

employer plan does not fail to satisfy the

universal availability requirement merely

because it permits non-collectively bar‑

gained employees who are subject to the

increased applicable dollar catch-up limit

for participants attaining age 60 through

63 under section 414(v)(2)(E) to make

catch-up contributions up to that increased

limit, while retaining the regular appli‑

cable dollar catch‑up limit under sec‑

tion 414(v)(2)(B)(i) or (ii), as applicable,

for its collectively bargained employees.

Another commenter requested that the

final regulations clarify whether flexibil‑

ity is available in relation to the increased

applicable dollar catch-up limit for partic‑

ipants attaining age 60 through 63 under

section 414(v)(2)(E) that would enable a

plan to permit fewer catch‑up eligible par‑

ticipants to make catch-up contributions

up to that increased limit or to limit the

increase so that it is below the statutory

maximum dollar amount.

The final regulations retain the excep‑

tion in proposed §1.414(v)‑1(e)(1)(iii)

with only minor modification. Thus,

under the final regulations, an applica‑

ble employer plan generally must sat‑

isfy the rule in existing §1.414(v)‑1(e)

(1)(i) or permit each participant to make

catch-up contributions equal to the statu‑

tory maximum that applies to the partici‑

pant. However, with respect to employees

described in section 410(b)(3), the final

regulations amend §1.414(v)‑1(e)(2) to

provide that an applicable employer plan

also does not fail to satisfy the universal

availability requirement of §1.414(v)‑1(e)

merely because employees described in

section 410(b)(3) are provided the oppor‑

tunity to make catch-up contributions

to a lesser extent than other employ‑

ees.10 Thus, for example, an applicable

employer plan does not fail to satisfy the

universal availability requirement merely

because it permits non‑collectively bar‑

gained employees who are subject to the

increased applicable dollar catch-up limit

for participants attaining age 60 through

63 under section 414(v)(2)(E) to make

catch-up contributions up to that increased

limit, while permitting collectively bar‑

gained employees to make catch-up con‑

tributions only up to the applicable dollar

catch‑up limit that applies generally under

section 414(v)(2)(B)(i) or (ii), as applica‑

ble.

One commenter requested clarifi‑

cation that the phrase “make the maxi‑

mum amount of catch-up contributions

permitted” in proposed §1.414(v)-1(e)

(1)(iii) would not preclude an employer

from utilizing the permitted practices

described in §1.414(v)‑1(e)(1)(ii) of the

existing regulations, including the cash

availability rule in §1.414(v)‑1(e)(1)(ii)

(B).11 Under §1.414(v)‑1(e)(1)(ii), an

applicable employer plan does not fail to

satisfy the universal availability require‑

ment of §1.414(v)‑1(e) merely because of

the practices described in §1.414(v)‑1(e)

(1)(ii). Accordingly, the Treasury Depart‑

ment and the IRS agree that the phrase

“make the maximum amount of catch-up

contributions permitted” in §1.414(v)‑1(e)

(1)(iii) of the final regulations does

not preclude an employer from utiliz‑

ing the permitted practices described in

§1.414(v)‑1(e)(1)(ii).

One commenter requested relief from

the universal availability requirement in

the case of a plan that permits catch-up eli‑

gible participants attaining age 60 through

63 under section 414(v)(2)(E) to make

catch-up contributions up to that increased

limit but another plan maintained by a

related employer does not, provided that

all plans maintained under the same con‑

trolled group of employers are amended

before the applicability date of the final

regulations to permit catch‑up eligible par‑

ticipants attaining age 60 through 63 under

section 414(v)(2)(E) to make catch-up

contributions up to that increased limit. As

explained in footnote 6 of the preamble to

the proposed regulations, the higher appli‑

Similarly, under proposed §1.414(v)-1(e)(1)(iii), an applicable employer plan that covers employees in both the United States and Puerto Rico would not fail to satisfy the requirements

of section 401(a)(4) merely because the plan allows catch-up eligible participants whose catch-up contributions are subject to the limit set forth in section 1081.01(d)(7) of the Puerto Rico

Internal Revenue Code of 2011 (13 L.P.R.A. section 30391(d)(7)), as amended (Puerto Rico Code), to make catch-up contributions only up to the amount of that limit ($1,500 for 2025).

10

The proposed regulations did not propose to amend §1.414(v)‑1(e)(2). Prior to amendment by these final regulations, §1.414(v)‑1(e)(2) provided that an applicable employer plan does

not fail to satisfy the universal availability requirement of §1.414(v)‑1(e) merely because employees described in section 410(b)(3) (for example, collectively bargained employees) are not

provided the opportunity to make catch‑up contributions.

11

Under §1.414(v)‑1(e)(1)(ii)(B), an applicable employer plan does not fail to satisfy the universal availability requirement of §1.414(v)‑1(e) merely because it restricts the elective deferrals

of any employee (including a catch-up eligible participant) to amounts available after other withholding from the employee’s pay (for example, after deduction of all applicable income and

employment taxes). For this purpose, an employer limit of 75% of compensation or higher will be treated as limiting employees to amounts available after other withholdings.

9

September 29, 2025

418

Bulletin No. 2025–40

cable dollar catch-up limit for participants

attaining age 60 through 63 may, but is not

required to be, included in an applicable

employer plan. However, if an applicable

employer plan provides for this higher

applicable dollar catch‑up limit, then any

applicable employer plan maintained by

an employer within the same controlled

group must also provide for this higher

applicable dollar catch-up limit, except to

the extent that the exception for employ‑

ees described in section 410(b)(3) applies

under §1.414(v)‑1(e)(2) of these regula‑

tions. The final regulations do not address

the application of the universal availabil‑

ity requirement before the applicability

date of the final regulations.

III. Section 1.414(v)-2

A. General rules relating to the

requirements of section 414(v)(7)

1. Roth catch-up requirement under

section 414(v)(7)(A)

Proposed §1.414(v)-2(a) would set

forth general rules relating to the Roth

catch‑up requirement under section 414(v)

(7)(A). Under proposed §1.414(v)-2(a)

(2), if a catch-up eligible participant in an

applicable employer plan had FICA wages

for the preceding calendar year from the

employer sponsoring the plan (as defined

in proposed §1.414(v)‑2(b)(3)) that

exceeded the Roth catch-up wage thresh‑

old, then section 414(v)(1) would apply

with respect to the participant’s elective

deferrals that are catch-up contributions

only if they are designated Roth contri‑

butions (as defined in section 402A(c)

(1)). Under proposed §1.414(v)-2(a)(3),

the initial $145,000 Roth catch‑up wage

threshold would be subject to cost‑of‑liv‑

ing adjustments, in accordance with

section 414(v)(7)(E).12 Under proposed

§1.414(v)-2(a)(4), the Roth catch-up

requirement would not apply to a par‑

ticipant in a SEP arrangement or a SIM‑

PLE IRA plan, in accordance with sec‑

tion 414(v)(7)(C). As further discussed

in this Section III.A.1, there are no sub‑

stantive changes to these provisions in the

final regulations.

Consistent with section 414(v)(7)

(A) and the description of anticipated

guidance in Notice 2023-62, proposed

§1.414(v)-2(a)(2) would provide that a

participant who did not have FICA wages

exceeding $145,000 (as adjusted) from

the employer sponsoring the plan for the

preceding calendar year would not be

subject to the Roth catch-up requirement

under the plan for the current year. Pro‑

posed §1.414(v)-2(a)(2) would define

FICA wages by reference to the FICA

taxes imposed by sections 3101(a) and

3111(a), not sections 3101(b) and 3111(b),

and would provide that the wages are

taken into account for this purpose in the

same year that they are taken into account

for FICA tax purposes. Accordingly, an

individual who did not have any FICA

wages from the employer sponsoring the

plan for the preceding calendar year (for

example, a partner who had only self-em‑

ployment income; an individual who had

wages under section 3231(e) that are sub‑

ject to taxation under the Railroad Retire‑

ment Tax Act, codified at title 45, chapter

9 of the United States Code, rather than

FICA; or a State or local government

employee whose services were excluded

from the definition of employment under

section 3121(b)(7) without regard to sec‑

tion 3121(u)) would not be subject to the

Roth catch-up requirement under the plan

in the current year. Similarly, an individ‑

ual who received cash compensation from

the employer sponsoring the plan in the

preceding calendar year but neverthe‑

less did not have any FICA wages from

the employer for that year (for example,

because the compensation was taxed in an

earlier year pursuant to section 3121(v)

(2)) would not be subject to the Roth

catch-up requirement under the plan in the

current year.

One commenter requested clarifica‑

tion as to why applicability of the Roth

catch‑up requirement would be deter‑

mined under the proposed regulations on

the basis of prior year FICA wages for pur‑

poses of sections 3101(a) and 3111(a) (that

is, FICA wages that are Social Security

wages reported in Box 3 of Form W-2), as

opposed to sections 3101(b) and 3111(b)

(that is, FICA wages that are Medicare

wages reported in Box 5 of Form W-2).

Section 1.414(v)-2(a)(2) retains the rule

defining FICA wages by reference to the

FICA taxes imposed by sections 3101(a)

and 3111(a) due to the impact that refer‑

encing the FICA taxes imposed by sec‑

tions 3101(b) and 3111(b) might have

on employees of State and local govern‑

ments. Section 3121(a) defines “wages”

for FICA purposes as all remuneration

for employment (subject to certain excep‑

tions). Under section 3121(b), which

defines “employment” for FICA purposes,

the services of certain employees are

excluded from the definition of employ‑

ment (including, under section 3121(b)

(7), the services of employees of State and

local governments unless an exception

applies) and, therefore, these employees

generally do not have wages under sec‑

tion 3121(a) and consequently are not

subject to section 414(v)(7) of the Code.13

However, as a result of section 3121(u)

(2), wages subject to the taxes imposed by

sections 3101(b) and 3111(b) are reported

in Box 5 for State and local government

employees who are covered by Medicare

even if no wages are reported in Box 3.

The Treasury Department and the IRS do

not interpret the Box 5 wages reported in

accordance with the exception in section

3121(u)(2) to be section 3121(a) FICA

wages for purposes of section 414(v)

(7) because Box 5 wages do not relate

to Social Security coverage. Therefore,

the final regulations retain the rule that

applicability of the Roth catch-up require‑

ment to a participant is based on the prior

year FICA wages reported in Box 3 of

Under proposed §1.414(v)-2(a)(2), the Roth catch-up wage threshold of $145,000 would be applied to a catch-up eligible participant’s 2023 FICA wages to determine whether the Roth

catch-up requirement applies to the participant’s catch‑up contributions made for 2024. In accordance with Notice 2024-80, 2024-47 IRB 1120, the Roth catch‑up wage threshold to be applied

to a catch-up eligible participant’s 2024 FICA wages to determine whether the Roth catch-up requirement applies to the participant’s catch‑up contributions made for 2025 would remain

$145,000.

13

If a state and local government employee does have wages under section 3121(a) that are subject to the taxes imposed by sections 3101(a) and 3111(a) pursuant to an exception to section

3121(b)(7) (for example, under section 3121(b)(7)(E), an employee who is subject to an agreement entered into pursuant to section 218 of the Social Security Act, or, under section 3121(b)

(7)(F), an employee who is not a member of a state retirement system), that employee is subject to section 414(v)(7) of the Code.

12

Bulletin No. 2025–40

419

September 29, 2025

Form W-2 for the participant. The use of

this rule achieves the intended result of

excepting those State and local govern‑

ment employees who do not have wages

subject to the taxes imposed by sections

3101(a) and 3111(a) relating to Social

Security coverage from the application of

section 414(v)(7).

The commenter also asked whether

a plan could rely on the Social Security

wages reported in Box 3 of a catch‑up

eligible participant’s Form W‑2 for the

preceding calendar year for purposes of

determining whether the participant is

subject to the Roth catch‑up requirement,

and whether the Social Security wage

base could have any impact on the Roth

catch‑up wage threshold. The Treasury

Department and the IRS do not expect

that the limitation of an employee’s wages

under sections 3101(a) and 3111(a) to

the maximum Social Security wage base

would affect the ability to determine appli‑

cability of the Roth catch-up wage thresh‑

old on the basis of those wages. For 2024,

the Social Security wage base limit was

$168,600, which is significantly higher

than the $145,000 threshold for 2024

wages on which applicability of the Roth

catch-up requirement in 2025 was based.

As both dollar amounts are adjusted annu‑

ally for cost‑of-living increases under cur‑

rent law, the Treasury Department and the

IRS do not expect that applying the Social

Security wage base limit will ever affect

the determination of whether a partici‑

pant is subject to the Roth catch-up wage

threshold.

Commenters also requested that, until

the applicability date of the final regula‑

tions, a plan be permitted to rely on Medi‑

care wages reported in Box 5 of a catch‑up

eligible participant’s Form W‑2 for the

preceding calendar year for purposes

of determining whether the participant

is subject to the Roth catch‑up require‑

ment. In response to these comments,

§1.414(v)‑2(e)(2)(i) clarifies that, for

contributions in taxable years prior to the

applicability date of the final regulations, a

reasonable, good faith interpretation stan‑

dard applies with respect to section 414(v)

(7). For a discussion of the application of

this standard, see the Applicability Dates

section later in this preamble.

2. Availability of Roth catch-up

contributions under section 414(v)(7)(B)

Section 414(v)(7)(B) provides that, in

the case of an applicable employer plan

with respect to which section 414(v)(7)

(A) applies to any participant for a plan

year, section 414(v)(1) shall not apply to

the plan unless the plan provides that any

catch-up eligible participant may make

catch-up contributions as designated Roth

contributions.

Proposed §1.414(v)-2(a)(5)(ii) would

set forth a rule to address the application

of section 414(v)(7)(B) to a plan that is

subject to the qualification requirements

of both section 401(a) and section 1081.01

of the Puerto Rico Code (dual‑qualified

plan).14 As explained in the preamble to

the proposed regulations, if a dual-qual‑

ified plan that covers both employees in

the United States and employees in Puerto

Rico permits any catch-up eligible partic‑

ipant who is subject to the Roth catch-up

requirement to make catch-up contribu‑

tions as designated Roth contributions

for a plan year, then, in accordance with

section 414(v)(7)(B), the plan generally

would be required to permit all catch-up

eligible participants to make catch-up

contributions as designated Roth contri‑

butions for the plan year. However, the

Puerto Rico Code currently does not pro‑

vide for designated Roth contributions. In

order to address this issue, the proposed

regulations would provide that, in the case

of a catch-up eligible participant who is

subject to the Roth catch-up requirement

of section 414(v)(7)(A) of the Code and

is subject to section 1081.01 of the Puerto

Rico Code, the requirements of sec‑

tion 414(v)(7)(B) of the Code would be

treated as satisfied if, under the applica‑

ble employer plan, that participant is per‑

mitted to make catch-up contributions as

after-tax contributions within the meaning

of section 1081.01(a)(15) of the Puerto

Rico Code.

Commenters requested that the final

regulations permit a dual-qualified plan to

offer a participant who is subject to both

section 414(v)(7)(A) of the Code and sec‑

tion 1081.01 of the Puerto Rico Code the

opportunity to make catch-up contributions

as pre-tax contributions (rather than aftertax catch-up contributions), and that the

plan need not offer after-tax catch-up con‑

tributions in order to satisfy section 414(v)

(7)(B) of the Code. These commenters

argued that the Roth catch‑up requirement

of section 414(v)(7)(A), and the related

Roth catch‑up availability requirement of

section 414(v)(7)(B), should not apply in

the case of a participant who, under the

Puerto Rico Code, is not permitted to make

designated Roth contributions.

The Treasury Department and the IRS

have determined that providing transition

relief for dual-qualified plans is consistent

with the historical approach taken with

respect to plans qualified under the Puerto

Rico Code if there is a difference in the

United States and Puerto Rico Codes that

does not allow for the same treatment of

contributions made by participants in the

United States and Puerto Rico.15 There‑

fore, in response to these comments, the

final regulations do not include the rule

set forth in proposed §1.414(v)‑2(a)(5)

(ii). Instead, §1.414(v)-2(a)(6) provides

that the Roth catch‑up requirement of sec‑

tion 414(v)(7)(A) and the Roth catch-up

availability requirement of section 414(v)

(7)(B) are treated as satisfied for a taxable

year with respect to a catch‑up eligible par‑

ticipant who is subject to section 1081.01

of the Puerto Rico Code, if that taxable

year begins before the effective date of

any future amendment to the Puerto Rico

Code to provide for designated Roth con‑

tributions.

For purposes of this Treasury decision, a dual-qualified plan includes a plan for which an election under section 1022(i)(2) of the Employee Retirement Income Security Act of 1974 (Public

Law 93-406, 88 Stat. 829), as amended (ERISA), has been made.

15

See, e.g., Notice 2002-4, 2002-1 CB 298, and TD 9072, 68 FR 40510, 40514 (July 8, 2003), which addressed the fact that catch-up contributions were not permitted under the Puerto Rico

Code but were permitted under the United States Code (“These final regulations do not affect the transitional relief granted in Notice 2002-4 that provides that an applicable employer plan will

not fail to satisfy the universal availability requirement solely because another applicable employer plan of the employer that is qualified under Puerto Rico law does not provide for catch-up

contributions.”). In a September 28, 2015, report (JCX-132-15), the Joint Committee on Taxation explained that, as a general matter, “Federal law does not require that the income tax laws

in force in the United States also be in force in…Puerto Rico.”

14

September 29, 2025

420

Bulletin No. 2025–40

Another commenter requested that the

final regulations clarify how the catch‑up

contribution rules apply to employees who

move between the mainland and Puerto

Rico during the year. The final regulations

do not address this comment as it involves

an interpretation of the Puerto Rico Code

and, therefore, is outside the scope of the

final regulations.

B. Rules of operation for implementing

the Roth catch-up requirement

1. Designated Roth contributions that

are treated as catch-up contributions

for purposes of the Roth catch-up

requirement

Under proposed §1.414(v)-2(b)(1),

an elective deferral that is determined

to be a catch‑up contribution at the time

of contribution under the timing rules in

§1.414(v)‑1(c)(3) of the existing regula‑

tions (for example, an elective deferral

that is a catch-up contribution because it

exceeds the section 401(a)(30) limit on

elective deferrals) would be required to

be made as a designated Roth contribution

by a participant who is subject to the Roth

catch-up requirement only to the extent

the participant has not previously made

elective deferrals as designated Roth

contributions during the calendar year or

taxable year equal to the applicable dollar

catch-up limit. Thus, if a catch-up eligible

participant’s total elective deferrals that

are designated Roth contributions over

the course of a calendar year or taxable

year (including, if applicable, contribu‑

tions to a pension‑linked emergency sav‑

ings account described in section 402A(e)

of the Code) equal or exceed the total

elective deferrals that are determined to

be catch-up contributions, then the par‑

ticipant would satisfy the Roth catch-up

requirement.16

One commenter requested that the

final regulations provide that designated

Roth contributions that are made prior to

a participant’s elective deferrals for the

calendar year reaching the section 401(a)

(30) limit may, but are not required to, be

taken into account for purposes of deter‑

mining whether the participant has satis‑

fied the Roth catch‑up requirement. The

commenter explained that some employ‑

ers have indicated that taking into account

designated Roth contributions that are

made earlier in a calendar year would cre‑

ate administrative burden and complexity.

In order to maintain flexibility for par‑

ticipants, §1.414(v)-2(b)(1) of the final

regulations retains the proposed rule that,

for a participant who is subject to the Roth

catch‑up requirement, an elective defer‑

ral that is treated as a catch-up contribu‑

tion at the time of deferral is required to

be a designated Roth contribution only

to the extent the participant has not pre‑

viously made elective deferrals that are

designated Roth contributions during the

taxable year equal to the applicable dollar

catch-up limit. However, as explained in

sections I and III.C.3.a of this Summary of

Comments and Explanation of Revisions

(“Amendments to Regulations Under Sec‑

tions 401(k) and 403(b) – Deemed Roth

Catch-up Election” and “Prerequisite to

correct certain section 414(v)(7) failures

under the new correction methods”), in

order to ease administrative burden for

plans, in determining when during the

year to implement a deemed Roth elec‑

tion under final regulation §1.401(k)‑1(f)

(5)(iii), a plan is not required to take into

account elective deferrals made by a par‑

ticipant earlier in the year as designated

Roth contributions. Thus, a plan may

provide that a deemed Roth election will

be implemented with respect to a partic‑

ipant once a participant’s total elective

deferrals for the year (including any des‑

ignated Roth contributions) equal the sec‑

tion 401(a)(30), 402(g)(7), or 457(b) limit,

as applicable. Further, after implementing

the deemed Roth election, the plan would

not be required to recharacterize any des‑

ignated Roth catch-up contributions made

pursuant to the deemed election as pre‑tax

for the purpose of counting any desig‑

nated Roth contributions made earlier in

the year by the participant toward satis‑

faction of the Roth catch-up requirement.

However, since the plan must also provide

such a participant an effective opportunity

to make a new election that is different

than the deemed election, if a partici‑

pant who is subject to the Roth catch-up

requirement makes an affirmative election

to make pre-tax catch-up contributions,

the plan would be required to take into

account any elective deferrals made by

the participant earlier in the year as des‑

ignated Roth contributions when deter‑

mining the amount of the pre-tax catch-up

contributions to be corrected in order to

comply with section 414(v)(7) (such that

the pre-tax catch-up contributions must be

corrected – that is, either distributed from

the plan or corrected in accordance with a

correction method set forth in final regula‑

tion §1.414(v)-2(c)(2) – only to the extent

that a participant’s catch-up contributions

for the year exceed the participant’s des‑

ignated Roth contributions made over the

course of the year).

Another commenter requested clarifi‑

cation as to whether an in‑plan Roth roll‑

over that is elected voluntarily by a partici‑

pant under section 402A(c)(4)(E) could be

used to satisfy the Roth catch‑up require‑

ment. The Treasury Department and

the IRS have determined that an in‑plan

Roth rollover that is elected by a partici‑

pant voluntarily under section 402A(c)(4)

(E) may not be used to satisfy the Roth

catch‑up requirement because the amount

of the in‑plan Roth rollover could be

attributable to contributions other than

elective deferrals. However, as described

in section III.C.2 of this Summary of

Comments and Explanation of Revisions

(“Additional permissible correction meth‑

ods for elective deferrals that exceed an

applicable limit”), §1.414(v)-2(c)(2)(iii)

of the final regulations generally retains

the provision of the proposed regulations

permitting a plan to use the in‑plan Roth

rollover correction method to correct a

pre‑tax elective deferral that exceeds an

applicable limit but does not satisfy the

Roth catch‑up requirement.

2. Plans that do not include a qualified

Roth contribution program

In accordance with section 402A(a),

an applicable employer plan may, but is

not required to, include a qualified Roth

This is also the case with respect to elective deferrals that are determined to be catch-up contributions because the plan would fail the actual deferral percentage (ADP) test under sec‑

tion 401(k)(3) if the plan did not correct under section 401(k)(8). The determination of elective deferrals that are catch-up contributions because they are in excess of the ADP limit in

§1.414(v)-1(b)(1)(iii) occurs in the plan year following the plan year for which the elective deferrals are made.

16

Bulletin No. 2025–40

421

September 29, 2025

contribution program within the meaning

of section 402A(b). In addition, under

the proposed regulations, an applicable

employer plan that allows catch-up con‑

tributions, but does not have a qualified

Roth contribution program, would not

be required to adopt such a program. The

plan would be allowed to permit catch-up

eligible participants who are not sub‑

ject to the Roth catch-up requirement to

make catch-up contributions but not per‑

mit catch-up eligible participants who are

subject to the Roth catch-up requirement

to make catch-up contributions.

With respect to the universal avail‑

ability requirement of §1.414(v)-1(e),

proposed §1.414(v)-2(b)(2) would pro‑

vide that an applicable employer plan that

does not include a qualified Roth contri‑

bution program would not fail to satisfy

the universal availability requirement

merely because the plan (or another appli‑

cable employer plan maintained by the

employer that does not include a qualified

Roth contribution program) does not per‑

mit catch-up eligible participants who are

subject to the Roth catch-up requirement

to make catch-up contributions. However,

proposed §1.414(v)-2(b)(2)(ii) also would

provide that existing §1.414(v)‑1(d)

(4)17 would not apply to an applicable

employer plan that does not include a

qualified Roth contribution program and

permits only catch-up eligible participants

who are not subject to the Roth catch-up

requirement to make catch-up contribu‑

tions. As explained in the preamble to the

proposed regulations, §1.414(v)‑1(d)(4)

would not apply to such a plan because

not all catch-up eligible employees under

the plan would be able to make catch-up

contributions.

Because the Roth catch-up wage

threshold is slightly lower than the wage

threshold used in the definition of highly

compensated employee (HCE) under sec‑

tion 414(q)(1)(B), some non-HCEs may

be subject to the Roth catch-up require‑

ment,18 and some HCEs may not be sub‑

ject to the Roth catch-up requirement (for

example, because they did not receive

FICA wages for the preceding year).

Thus, if a plan that does not include a

qualified Roth contribution program pro‑

hibits catch-up eligible participants who

are subject to the Roth catch-up require‑

ment from making catch-up contributions,

while permitting other catch-up eligible

participants to make catch-up contribu‑

tions, then the plan might fail to satisfy

the nondiscrimination test with respect

to the availability of catch-up contribu‑

tions performed under §1.401(a)(4)-4.

Accordingly, proposed §1.414(v)-2(b)

(2)(ii) would provide that such a plan

would be permitted 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

from the employer sponsoring the plan for

the preceding year) from making catch-up

contributions if doing so facilitates satis‑

faction of §1.401(a)(4)-4 with respect to

the availability of catch‑up contributions.

Commenters generally requested that

the final regulations provide that a plan

will not be treated as failing to satisfy

benefits, rights, and features testing under

section 401(a)(4) with respect to catch‑up

contributions merely because the plan

does not include a qualified Roth contribu‑

tion program. These commenters argued

that, although some non-HCEs (those who

are subject to the Roth catch‑up require‑

ment) would not be permitted to make

catch‑up contributions under such a plan

design, HCEs also generally would be

excluded from making catch‑up contribu‑

tions, and that it would be impractical to

satisfy §1.401(a)(4)‑4 by precluding one

or more catch-up eligible participants who

are HCEs and who are not subject to the

Roth catch‑up requirement from making

catch‑up contributions. One of these com‑

menters requested that, if the final regula‑

tions retain the approach in the proposed

regulations, the final regulations clarify

how a plan that fails to satisfy benefits,

rights, and features testing with respect

to catch‑up contributions could preclude

one or more HCEs who are not subject

to the Roth catch-up requirement from

making catch-up contributions in a timely

manner. Another commenter requested

that, if the final regulations do not treat

§1.414(v)-1(d)(4) as applying, then non‑

discrimination testing for a plan that does

not include a qualified Roth contribution

program should be based only on partici‑

pants who are age 50 and above, and not

on the entire employee population.

The final regulations generally retain

the rules of proposed §1.414(v)‑2(b)

(2) (although §1.414(v)‑2(b)(2)(ii) is

renumbered as §1.414(v)‑2(b)(3) in the

final regulations). However, in response

to these comments, the final regulations

clarify that, in the case of a plan that does

not include a qualified Roth contribution

program (and, therefore, may need to pre‑

clude one or more catch‑up eligible par‑

ticipants who are HCEs and who are not

subject to the Roth catch‑up requirement

from making catch‑up contributions to

facilitate satisfaction of §1.401(a)(4)-4

with respect to the availability of catch‑up

contributions), the plan will be deemed to

satisfy §1.401(a)(4)-4 with respect to the

availability of catch‑up contributions if

the plan provides that all catch-up eligible

participants who are HCEs with net earn‑

ings from self‑employment for the preced‑

ing calendar year from the employer spon‑

soring the plan above the Roth catch‑up

wage threshold are not permitted to make

catch‑up contributions. This safe harbor

provision may be used even if a plan does

not have any participants with net earnings

from self‑employment for the preceding

calendar year. In addition, §1.414(v)‑2(b)

(3) of the final regulations provides that

this safe harbor provision may be used

by a plan that includes a qualified Roth

contribution program and, in accordance

with §1.414(v)-2(b)(4)(ii), (b)(4)(iii), or

(b)(4)(iv)(A), does not permit pre-tax

catch-up contributions for one or more

employees who are not subject to sec‑

tion 414(v)(7) (that is, one or more nonHCEs who are determined to be subject

to the Roth catch-up requirement solely

due to an optional plan term providing for

aggregation of wages in accordance with

§1.414(v)-2(b)(4)(ii), (b)(4)(iii), or (b)(4)

(iv)(A) of these regulations).

Generally, under §1.414(v)-1(d)(4), an applicable employer plan does not violate §1.401(a)(4)-4 merely because the group of employees for whom catch-up contributions are currently

available is not a group of employees that would satisfy the minimum coverage requirements of section 410(b).

18

If an employer makes the top-paid group election under section 414(q)(1)(B)(ii), the number of non‑HCEs that are over the wage threshold used in the definition of HCE will be higher, and

thus the number of non-HCEs subject to the Roth catch-up requirement will be higher.

17

September 29, 2025

422

Bulletin No. 2025–40

3. Coordination with other catch-up

contributions

One commenter requested examples

to illustrate the interaction between the

requirement that certain catch‑up contri‑

butions be designated Roth contributions

and the rule permitting special catch‑up

contributions for section 403(b) plans

under section 402(g)(7) for employees

with at least 15 years of service. Two

other commenters requested clarification

that the requirement that certain catch‑up

contributions be designated Roth contri‑

butions does not apply to the special sec‑

tion 403(b) catch‑up contributions.

As described in §1.403(b)‑4(c)(2) of

the existing regulations, the catch‑up

contributions described in section 414(v)

may apply in a year in which a partic‑

ipant also qualifies for the special sec‑

tion 403(b) catch‑up contributions. In

addition, §1.403(b)‑4(c)(3)(iv) provides

that any catch-up amount contributed

by an employee who is eligible for both

types of catch‑up contributions is treated

first as a special section 403(b) catch‑up

contribution and then as a catch-up contri‑

bution under section 414(v). Accordingly,

the special section 403(b) catch-up contri‑

butions are not subject to section 414(v),

including the requirement under sec‑

tion 414(v)(7) that certain catch‑up contri‑

butions be designated Roth contributions.

One commenter requested examples to

illustrate the application of section 457(e)

(18)(A)(ii), and another commenter

requested clarification that the require‑

ment that certain catch‑up contributions

be designated Roth contributions does

not apply to the special section 457(b)(3)

catch‑up contributions permitted for the

last three taxable years ending before an

individual attains normal retirement age.

As described in the Background section of

this Treasury decision, if a catch‑up eligi‑

ble participant’s limit under section 457(e)

(18) is greater than the limit under sec‑

tion 457(b)(3) (determined without regard

to section 457(e)(18)), then a portion of

the catch‑up contributions made to the

eligible governmental 457(b) plan by the

participant is required to be designated

Roth contributions. As noted in footnote

5 of the preamble to the proposed regu‑

lations, proposed regulations relating to

the inclusion of a qualified Roth contribu‑

tion program in an eligible governmental

457(b) plan were published in the Federal

Register (81 FR 40548) and those pro‑

posed regulations have not been finalized.

4. Determination of employer sponsoring

the plan

The determination as to whether the

Roth catch-up requirement applies to

a catch-up eligible participant is based

on the amount of the participant’s FICA

wages for the preceding year “from the

employer sponsoring the plan,” but that

phrase is not defined in section 414(v)(7).

For purposes of determining an individ‑

ual’s FICA wages, the term “employer”

generally means the person for whom

the individual performs service as an

“employee” (determined under the com‑

mon law standards for employee status

set forth in §31.3121(d)-1(c)). Thus, for

purposes of determining the individual’s

FICA wages, the term “employer” gener‑

ally refers solely to an individual’s com‑

mon law employer.19 Because the phrase

“from the employer sponsoring the plan”

modifies the reference to FICA wages in

section 414(v)(7)(A), the determination

of whether the Roth catch-up requirement

applies to a participant would generally

follow the FICA rules and be based on the

FICA wages from the participant’s com‑

mon law employer.

Proposed §1.414(v)-2(b)(3) would pro‑

vide that, with respect to each catch‑up eli‑

gible participant who is subject to the Roth

catch-up requirement, the term “employer

sponsoring the plan” refers only to the

participant’s common law employer con‑

tributing to the plan. Under the proposed

regulation, the employer sponsoring the

plan would not include other entities that

are treated as a single employer with a

catch‑up eligible participant’s common

law employer under section 414(b), (c),

(m), or (o). Some commenters agreed with

the approach in the proposed regulation.

Other commenters requested that the final

regulation provide an option to aggregate

FICA wages from different employers in

certain situations, in order to ease plan

administration by aligning determina‑

tion of applicability of the Roth catch-up

requirement with the employers’ gen‑

eral payroll practices. These comment‑

ers argued that this aggregation option

would be particularly helpful in situations

involving entities that are aggregated with

the participant’s common law employer

under section 414(b), (c), (m), or (o) and

situations involving a common paymaster

in accordance with section 3121(s).

Section 1.414(v)‑2(b)(4)(i) of the final

regulations, which is renumbered from

proposed §1.414(v)‑2(b)(3), provides

that, with respect to each catch‑up eligi‑

ble participant who is subject to the Roth

catch‑up requirement, the term “employer

sponsoring the plan” refers to the partic‑

ipant’s common law employer contribut‑

ing to the plan. However, in response to

comments, §1.414(v)‑2(b)(4)(ii) provides

that if the common law employer uses a

common paymaster in accordance with

section 3121(s), the plan may provide that

the employee’s common law employer is

aggregated with one or more other employ‑

ers using that common paymaster and

treat the aggregated employers as a single

employer sponsoring the plan for purposes

of section 414(v)(7) and §1.414(v)‑2.

Section 1.414(v)‑2(b)(4)(iii) also pro‑

vides that if the common law employer

is a member of a group of employers that

are treated as a single employer under the

rules of section 414(b), (c), (m), or (o),

the plan may provide that the employee’s

common law employer is aggregated with

one or more other employers in that group

of employers and treat the aggregated

employers as a single employer sponsor‑

ing the plan for purposes of section 414(v)

(7) and §1.414(v)‑2. For example, a plan

could provide for aggregation of selected

related employers for purposes of sec‑

In general, FICA wages are determined separately by related employers. See §31.3121(a)(1)-1(a)(3) (“If during a calendar year the employee receives remuneration from more than one

employer, the annual wage limitation does not apply to the aggregate remuneration received from all of such employers, but instead applies to the remuneration received during such calendar

year from each employer.”). See also §31.3121(s)-1(a) (“For purposes of section…3121(a)(1), except as otherwise provided…, when two or more related corporations concurrently employ

the same individual and compensate that individual…, each of the corporations is considered to have paid only the remuneration it actually disburses to that individual.”).

19

Bulletin No. 2025–40

423

September 29, 2025

tion 414(v)(7) by listing the employers

being aggregated in the plan document.

In cases of aggregation in accordance

with §1.414(v)-2(b)(4)(ii) or (iii), the

employee’s wages from the common

law employer and from the one or more

other employers that are aggregated with

the common law employer are treated as

wages from the employer sponsoring the

plan.

One commenter requested that the final

regulations address how applicability of

the Roth catch-up requirement is deter‑

mined for a calendar year for which wages

paid to an employee by a predecessor

employer are attributed to the employee’s

common law employer who is a successor

employer on account of an asset purchase

in accordance with §31.3121(a)(1)‑1(b).

Specifically, the commenter requested that

the final regulations provide a safe harbor

permitting plan administrators to rely on

wage information as reported on a Form

W-2 issued by the successor employer for

the calendar year of the asset purchase in

accordance with the standard or alternate

procedure for Form W-2 reporting set

forth in Rev. Proc. 2004-53, 2004-34 IRB

320.20

Section 1.414(v)-2(b)(4)(iv) of the

final regulations provides such a safe

harbor. Thus, pursuant to §1.414(v)‑2(b)

(4)(iv)(A), if a successor employer files

a Form W-2 for the calendar year of the

asset purchase in accordance with the

alternate procedure set forth in Rev. Proc.

2004-53, then a plan that is sponsored by

the successor employer (or an entity that

is aggregated with the successor employer

in accordance with final regulation

§1.414(v)-2(b)(4)(ii) or (iii)) may pro‑

vide that all of the wages reported in Box

3 of the Form W-2 are treated as wages

from the employer sponsoring the plan

for purposes of determining applicability

of the Roth catch-up requirement. So, too,

pursuant to §1.414(v)‑2(b)(4)(iv)(B), if a

successor employer files a Form W-2 for

the calendar year of the asset purchase in

accordance with the standard procedure

set forth in Rev. Proc. 2004-53, then a

plan that is sponsored by the successor

employer (or an entity that is aggregated

with the successor employer in accor‑

dance with final regulation §1.414(v)-2(b)

(4)(ii) or (iii)) may provide that the wages

paid by the successor employer for the

year that are treated as wages from the

employer sponsoring the plan for pur‑

poses of determining applicability of the

Roth catch-up requirement are limited to

the wages reported in Box 3 of the Form

W-2.

One commenter requested that the final

regulations address the treatment, for pur‑

poses of section 414(v)(7), of an employee

who receives wages from an entity that is

disregarded as an entity separate from its

owner in accordance with §301.7701‑2(c)

(2)(i) (that is, the entity has not made an

election under §301.7701‑3(b)(1)(ii) to

be classified as a corporation). The com‑

menter noted that a disregarded entity is

generally disregarded for Federal income

tax purposes but is treated as a separate

entity for employment tax purposes. Sec‑

tion 1.414(v)-2(b)(4)(v) of the final regu‑

lations provides that the owner of the dis‑

regarded entity is treated as the employer

sponsoring the plan and the employee’s

wages from the employer sponsoring the

plan include the employee’s wages from

the disregarded entity and from its owner.

One commenter suggested that, for

purposes of the Roth catch-up require‑

ment as applied to a multiemployer plan,

the employer sponsoring the plan is

the joint board of trustees because sec‑

tion 3(16)(B) of ERISA defines the “plan

sponsor” of a multiemployer plan as the

joint board of trustees (rather than the con‑

tributing employers). Under the interpre‑

tation of section 414(v)(7)(A) suggested

by the commenter, the employees of those

other employers would not be subject to

section 414(v)(7)(A) (because those other

employers are merely signatories of the

collective bargaining agreement pursuant

to which their employees participate in the

multiemployer plan and are contributors

to that plan, but would not be employees

of the employer sponsoring the plan).21 As

explained in the preamble to the proposed

regulations, the Treasury Department and

the IRS do not agree that this is a reason‑

able interpretation of section 414(v)(7)(A)

because the rules in title 29 of the United

States Code, which includes section 3(16)

(B) of ERISA, are separate from the rules

of the Internal Revenue Code in title 26

of the United States Code, and title 29 of

the United States Code does not include

any provisions that directly apply to, or

are parallel to, the Code’s catch-up contri‑

bution rules. Rather, in the context of the

Roth catch-up requirement, the employer

sponsoring the plan is the common law

employer that is the source of the par‑

ticipant’s FICA wages and contributions

to the multiemployer plan (but the plan

may provide for aggregation of FICA

wages from certain related employers as

described earlier in this preamble section).

5. Plans with more than one employer

sponsoring the plan

For a plan that has more than one

employer sponsoring the plan, proposed

§1.414(v)-2(b)(4) would apply the Roth

catch-up requirement on the basis of FICA

wages (if any) for the preceding calendar

year solely from a participant’s common

law employer without aggregating those

wages with the FICA wages from other

employers, including employers that par‑

ticipate in the same plan or employers that

are treated as a single employer together

with the common law employer under

section 414(b), (c), (m), or (o). Thus,

under the proposed regulations, a catch-up

eligible participant who had FICA wages

exceeding $145,000 (as adjusted) in

the preceding calendar year from any

employer other than the employer sponsor‑

ing the plan (as defined with respect to the

participant in accordance with proposed

Under the standard procedure set forth in Rev. Proc. 2004-53, the predecessor and successor employers report the wages each pays during the calendar year in which the asset purchase

occurs on a separate Form W-2. Despite the separate Form W-2 reporting, the wages reported by the successor employer in Box 3 of the Form W-2 cannot exceed the difference between the

Social Security wage base limit for the year and the wages paid by the predecessor employer during the calendar year. Under the alternate procedure, the successor employer reports all of

the wages paid by both the predecessor employer and the successor employer in the calendar year in which the asset purchase occurs on a single Form W-2 (with the wages reported in Box

3 limited to the Social Security wage base limit for the calendar year).

21

Even under the commenter’s interpretation, an employee of the joint board of trustees who has wages from that employer in excess of the Roth catch-up wage threshold would be subject

to section 414(v)(7)(A) because the joint board of trustees is the employer sponsoring the plan.

20

September 29, 2025

424

Bulletin No. 2025–40

§1.414(v)-2(b)(3)) would not be subject to

the Roth catch-up requirement under the

plan in the current year if the participant

did not also have more than $145,000 (as

adjusted) of FICA wages for the preced‑

ing year from the employer sponsoring the

plan. Section 1.414(v)‑2(b)(5) of the final

regulations, which was renumbered from

proposed §1.414(v)-2(b)(4), includes

that same rule related to wages from an

employer other than the employer spon‑

soring the plan, except that the rule takes

into account the new optional aggregation

rules of §1.414(v)‑2(b)(4) for determining

the employer sponsoring the plan (that

is, the rules allowing for aggregation of

wages in situations involving controlled

groups and common paymasters).

C. Treatment of pre-tax catch-up

contributions that are required to be

designated Roth contributions under

section 414(v)(7)

1. Correcting a violation of the

section 414(v)(7) Roth catch-up

requirement

As explained in the Background sec‑

tion of the preamble to the proposed reg‑

ulations, section 414(v)(7)(A) provides

that section 414(v)(1) applies to catch-up

contributions made by a participant who is

subject to the Roth catch-up requirement

only if the catch-up contributions are des‑

ignated Roth contributions. If a partici‑

pant who is subject to the Roth catch-up

requirement makes a pre-tax elective

deferral in excess of an applicable limit,

then section 414(v)(1) will not apply to

that elective deferral and the plan will fail

to be qualified unless the plan corrects the

failure. A plan is permitted to correct this

type of error by distributing the additional

elective deferrals that are not catch-up

contributions under section 414(v)(1)

from the plan in accordance with a permit‑

ted correction method specific to the limit

on elective deferrals that the additional

elective deferrals exceeded (for example,

the correction method in §1.402(g)‑1(e)

for elective deferrals that exceeded the

section 401(a)(30) limit, the correction

method in section 6.06(1) and (2) of Rev‑

enue Procedure 2021-30, 2021-31 IRB

172, for elective deferrals that resulted in

the participant’s annual additions exceed‑

Bulletin No. 2025–40

ing the section 415(c) limit, or the cor‑

rection method in §1.401(k)-2(b)(2) or

Appendix B, section 2.01, of Revenue

Procedure 2021-30 for elective deferrals

that exceeded the ADP limit).

One commenter requested clarification

regarding the treatment of excess contri‑

butions (as defined in Code section 401(k)

(8)(B)) as catch‑up contributions that

are not required to be distributed under

§1.401(k)‑2(b)(4)(v) in the case of a plan

with a plan year other than the calendar

year and an HCE who is not subject to

the Roth catch‑up requirement for part of

the plan year and is subject to the Roth

catch‑up requirement for the remainder

of the plan year. Under §1.401(k)‑2(b)(1)

(ii), a plan may permit an HCE with elec‑

tive contributions for a year that includes

both pre‑tax elective contributions and

designated Roth contributions to elect

whether the excess contributions are to be

attributed to pre-tax elective contributions

or designated Roth contributions. Consis‑

tent with that rule, a plan may permit an

HCE who was subject to the Roth catch-up

requirement for only part of the plan year

to elect whether the excess contributions

that are treated as catch‑up contributions

are contributions that were subject to the

Roth requirement or were permitted to be

pre‑tax contributions.

2. Additional permissible correction

methods for elective deferrals that exceed

an applicable limit

As an alternative to making a corrective

distribution, proposed §1.414(v)‑2(c)(2)

would permit a plan to use either of two

new methods to correct a section 414(v)

(7) failure.

a. Form W-2 correction method

Under the correction method set forth

in proposed §1.414(v)‑2(c)(2)(ii), a plan

would be permitted to correct a partici‑

pant’s pre-tax catch-up contribution that

was required to be a designated Roth con‑

tribution by transferring the elective defer‑

ral (adjusted for allocable gain or loss)

from the participant’s pre-tax account

to the participant’s designated Roth

account and reporting the contribution

(not adjusted for allocable gain or loss)

as a designated Roth contribution on the

425

participant’s Form W-2 for the year of the

deferral (that is, reporting the contribution

as if it had been correctly made as a des‑

ignated Roth contribution). As explained

in Section III.C.2.a of the preamble to the

proposed regulations (“Form W-2 Cor‑

rection Method”), the contribution (not

adjusted for allocable gain or loss) would

be includible in the participant’s gross

income for the year of the deferral as if the

contribution had been correctly made as a

designated Roth contribution. However,

this method would not be permitted to be

used if the participant’s Form W-2 for that

year has already been filed or furnished to

the participant.

One commenter requested that the

final regulations permit a correction under

the Form W‑2 correction method to be

reported on a participant’s amended Form

W‑2 for the year of the deferral (in other

words, permit the Form W‑2 correction

method to be used even if the participant’s

Form W‑2 for the year of the deferral

has already been filed or furnished to the

participant). The final regulations do not

reflect this request because the Treasury

Department and the IRS have determined

that such an approach would be overly

burdensome to affected participants, who

might be required to file amended income

tax returns to reflect the amended Forms

W‑2, and create additional administra‑

tive burden for the IRS, which would be

required to process any amended Federal

income tax returns.

Another commenter explained that the

Form W‑2 correction method is unlikely

to be effectively implemented by multi‑

employer plans because those plans do

not have access to or control over their

contributing employers’ payroll systems.

However, as described in section III.C.2.b

of this Summary of Comments and Expla‑

nation of Revisions (“In-plan Roth roll‑

over correction method”), these final

regulations also include an in‑plan Roth

rollover correction method as an alterna‑

tive to distribution.

Accordingly, the final regulations

generally retain the Form W-2 correc‑

tion method as set forth in proposed

§1.414(v)‑2(c)(2)(ii) without modifica‑

tion. However, the final regulations clarify

the method for calculating earnings and

losses for purposes of determining the

amount to be transferred from a partici‑

September 29, 2025

pant’s pre-tax account to the participant’s

designated Roth account, as described

in section III.C.2.b of this Summary of

Comments and Explanation of Revi‑

sions (“In-plan Roth rollover correction

method”).

b. In-plan Roth rollover correction

method

Under proposed §1.414(v)-2(c)(2)(iii),

a plan would be permitted to correct a par‑

ticipant’s pre-tax catch-up contribution

that was required to be a designated Roth

contribution through an in-plan Roth roll‑

over in accordance with section 402A(c)

(4)(E). As explained in Section III.C.2.b

of the preamble to the proposed regula‑

tions (“In-Plan Roth Rollover Correction

Method”), a plan would directly roll over

the elective deferral (adjusted for allo‑

cable gain or loss) from the participant’s

pre-tax account to the participant’s desig‑

nated Roth account and report the amount

of the in‑plan Roth rollover on Form

1099‑R (Distributions From Pensions,

Annuities, Retirement or Profit-Sharing

Plans, IRAs, Insurance Contracts, etc.)

for the year of rollover. The provisions of

Notice 2010‑84, 2010-51 IRB 872, and

Notice 2013‑74, 2013-52 IRB 819, would

generally apply to an in-plan Roth roll‑

over used to correct a section 414(v)(7)

failure. Thus, the amount directly rolled

over to the participant’s designated Roth

account would be the same as the amount

reported on Form 1099-R, and the contri‑

bution (adjusted for allocable gain or loss)

would be includible in the participant’s

gross income for the year of the rollover.

One commenter requested that the final

regulations not require that an amount

directly rolled over to a participant’s des‑

ignated Roth account be adjusted for allo‑

cable gain or loss. The final regulations

do not reflect this comment because the

amount directly rolled over to the partic‑

ipant’s designated Roth account would

be includible in the participant’s gross

income for the year of the rollover, which

may be a later year than the year the con‑

tribution would have been includible if it

had been made correctly as a designated

Roth contribution. Thus, the adjustment

for any allocable gain would serve to

balance any delayed inclusion in gross

income.

September 29, 2025

The commenter also requested that,

if the final regulations require that the

amount directly rolled over to a par‑

ticipant’s designated Roth account be

adjusted for allocable gain or loss, the final

regulations maintain flexibility as to the

method a plan uses to calculate the gain or

loss. Another commenter requested that,

with respect to both the Form W-2 and

in-plan Roth rollover correction methods,

the final regulations provide a rule simi‑

lar to §1.401(k)‑2(b)(2)(iv), under which

a plan generally may use any reasonable

method for computing the income allo‑

cable to excess contributions or use the

alternative method under §1.401(k)‑2(b)

(2)(iv)(C). In response to these comments,

§1.414(v)-2(c)(2)(ii) and (iii) of the final

regulations clarifies that the adjustment

for earnings or losses for an in-plan Roth

rollover correction must be calculated in

accordance with the flexible standard pro‑

vided under §1.402(g)‑1(e)(5). A similar

clarification applies for purposes of deter‑

mining the amount to be transferred to

the participant’s designated Roth account

if a section 414(v)(7) failure is corrected

under the Form W-2 method.

Commenters also requested clarifi‑

cation regarding the extent to which an

in-plan Roth rollover that is used to cor‑

rect a section 414(v)(7) failure is differ‑

ent than an in-plan Roth rollover under

section 402A(c)(4)(E). One commenter

requested that the final regulations clarify

that the participant election provision of

section 402A(c)(4)(E)(i) does not apply

to an in-plan Roth rollover that is used to

correct a section 414(v)(7) failure. The

Treasury Department and the IRS agree

that an in‑plan Roth rollover correction is

permitted to be made only by a plan and

may not be elected voluntarily by a partic‑

ipant. Therefore, in response to these com‑

ments, §1.414(v)‑2(c)(2)(iii) requires that

the rules of section 402A(c)(4)(E)(ii) and

(iii) (rather than section 402A(c)(4)(E) in

its entirety) apply to the correction.

Similarly, some commenters requested

clarification that a plan may provide

for the use of the in‑plan Roth rollover

method to correct a section 414(v)(7) fail‑

ure even if the plan does not permit partic‑

ipants to elect in-plan Roth rollovers under

section 402A(c)(4)(E). As explained in

Q&A-2 of Notice 2010-84, a participant

may elect an in-plan Roth rollover only if

426

the plan provides for such rollovers. How‑

ever, the Treasury Department and the

IRS agree that, because an in‑plan Roth

rollover correction for a section 414(v)(7)

failure is implemented pursuant to plan

terms rather than a participant’s voluntary

election, a plan may provide for the use

of the in‑plan Roth rollover correction

method even if the plan does not permit

participants to elect in‑plan Roth rollovers

under section 402A(c)(4)(E).

One commenter requested clarification

that the use of the in-plan Roth rollover

correction method is not a benefit, right,

or feature that is subject to section 401(a)

(4). Under existing §1.401(a)(4)‑4(e)(3)

(iii)(I), the right to make rollover contri‑

butions and transfers to and from a plan

(which would include the right to make an

in‑plan Roth rollover) is a right or feature.

However, a plan’s use of the in-plan Roth

rollover correction method is an adminis‑

trative detail not reasonably expected to

be of meaningful value to an employee

under §1.401(a)(4)‑4(e)(3)(ii)(C) and not

a benefit, right, or feature for purposes of

section 401(a)(4) and §1.401(a)(4)‑4.

Commenters also requested clarifica‑

tion regarding the taxable year in which

the 5-taxable-year period for a qualified

distribution under section 402A(d)(2)(B)

begins if an amount that is transferred pur‑

suant to the Form W-2 correction method,

or directly rolled over pursuant to the

in-plan Roth rollover correction method,

is the first contribution to a participant’s

designated Roth account. One commenter

requested that the final regulations provide

that, under either correction method, the

5‑taxable‑year period begins in the year

in which the pre‑tax elective deferral was

made, and another commenter requested

confirmation that an amount directly

rolled over to a participant’s designated

Roth account pursuant to an in‑plan Roth

rollover correction is treated in the same

manner as a participant-initiated Roth

contribution for purposes of determining

the 5-taxable-year period.

Under section 402A(d)(2)(B), for pur‑

poses of determining whether a payment

or distribution from a designated Roth

account is treated as a qualified distribu‑

tion, the 5‑taxable-year period generally

begins with “the first taxable year for

which the individual made a designated

Roth contribution to any designated Roth

Bulletin No. 2025–40

account established for such individual

under the same applicable retirement

plan….”22 If an amount that is transferred

pursuant to the Form W‑2 correction

method or directly rolled over pursuant

to the in‑plan Roth rollover correction

method is the first contribution to a par‑

ticipant’s designated Roth account, then

the 5-taxable-year-period begins with the

taxable year for which the amount trans‑

ferred or directly rolled over is includible

in the participant’s gross income (which,

depending on the circumstances, could be

the same taxable year in which the pre-tax

elective deferral was made or the next tax‑

able year).

Commenters also requested that the

final regulations provide that an in‑plan

Roth rollover that is made as a correction

for a section 414(v)(7) failure and distrib‑

uted within the 5-taxable-year period that

begins on January 1 of the year of the cor‑

rection is not subject to the 5-year recap‑

ture rule under sections 402A(c)(4)(D) and

408A(d)(3)(F).23 Commenters argued that

the 5‑year recapture rule should not apply

in this circumstance because, if the pre‑tax

elective deferral had been correctly made

as a designated Roth contribution, then the

5‑year recapture rule would not apply to a

later distribution of that designated Roth

contribution.

The final regulations do not reflect

these comments with respect to the 5‑tax‑

able‑year period and the 5-year recapture

rule because the Treasury Department

and the IRS have determined that align‑

ing the in‑plan Roth rollover correction

method with the existing provisions of

section 402A(c)(4)(E)(ii) and (iii) would

facilitate sound tax administration (for

example, by requiring that the correction

be consistently treated as an in-plan Roth

rollover for purposes of Form 1099‑R

reporting). Thus, for example, if an in‑plan

Roth rollover that is made as a correction

for a section 414(v)(7) failure is distrib‑

uted within the 5-taxable-year period that

begins on January 1 of the year in which

the in‑plan Roth rollover is made, then

the distribution would be subject to a 10

percent additional tax under section 72(t)

unless an exception applies under sec‑

tion 72(t)(2).

c. Consistency requirements for choice of

correction method

Under proposed §1.414(v)‑2(c)(2)(i),

a plan would be permitted to provide for

either correction method but, with respect

to a plan year, the plan would be required

to apply the same correction method for

all participants with elective deferrals in

excess of the same applicable limit.

Commenters requested that the final

regulations not include the requirement

that, with respect to a plan year, a plan

apply the same correction method for

all participants with elective deferrals

in excess of the same applicable limit.

Commenters argued that this requirement

would discourage the use of the Form W‑2

correction method due to the possibility

that elective deferrals for some partici‑

pants might be corrected using the Form

W‑2 correction method but other partici‑

pants with elective deferrals in excess of

the same applicable limit might not be

identified until after the Forms W-2 for

the year of the deferral have been filed

or furnished to the participants. In such

case, the in‑plan Roth rollover correction

method could not be used with respect

to those later identified participants and

their additional elective deferrals would

be required to be distributed from the plan

in accordance with a permitted correction

method specific to the limit on elective

deferrals that the additional elective defer‑

rals exceeded.

In response to these comments, the

final regulations do not require that, with

respect to a plan year, a plan apply the

same correction method for all partici‑

pants with elective deferrals in excess

of the same applicable limit. Instead,

§1.414(v)‑2(c)(2)(i) provides flexibility

by merely requiring that a plan apply the

same correction method for similarly sit‑

uated participants. Section 1.414(v)‑2(c)

(2)(i) provides further that the selection of

which correction method applies may not

be based on the investment returns earned

in participants’ accounts. For example, a

plan may provide for correction using the

Form W-2 correction method for all par‑

ticipants for whom the Forms W‑2 for that

year have not been filed or furnished and

for correction using the in‑plan Roth roll‑

over correction method for all other par‑

ticipants.

3. General correction requirements and

deadlines to correct

a. Prerequisite to correct certain

section 414(v)(7) failures under the new

correction methods

Under proposed §1.414(v)-2(c)(3)

(i), a plan would be eligible to use the

Form W‑2 or in‑plan Roth rollover cor‑

rection method with respect to pre-tax

elective deferrals that exceed a statu‑

tory limit described in §1.414(v)-1(b)

(1)(i) (such as contributions that exceed

the section 401(a)(30) limit or that result

in the participant’s annual additions

exceeding the section 415(c) limit) only

if the plan sponsor or plan administra‑

tor has in place practices and procedures

designed to result in compliance with

section 414(v)(7) at the time an elective

deferral is made.24 A plan would not meet

this requirement unless the plan provides

for a deemed Roth catch-up election in

accordance with proposed §1.401(k)‑1(f)

(5)(iii) and (iv). Under the deemed Roth

catch‑up election approach, if a partici‑

pant who is subject to the Roth catch‑up

As explained in Q&A‑8 of Notice 2013‑74, if an in-plan Roth rollover is the first contribution made to an employee’s designated Roth account, the 5-taxable-year period begins on the first

day of the first taxable year in which the employee makes the in-plan Roth rollover.

23

Under section 402A(c)(4)(D), the 5-year recapture rules of section 408A(d)(3)(F) apply for purposes of section 402A(c)(4). Q&A‑12 of Notice 2010‑84 explains that, pursuant to sec‑

tions 402A(c)(4)(D) and 408A(d)(3)(F), if an amount allocable to the taxable amount of an in-plan Roth rollover is distributed within the 5-taxable-year period beginning with the first day

of the participant’s taxable year in which the rollover was made, the amount distributed is treated as includible in gross income for the purpose of applying section 72(t). Therefore, if a plan

distributes any part of an in-plan Roth rollover within this 5‑taxable‑year period, the distribution is subject to a 10 percent additional tax under section 72(t) unless an exception applies under

section 72(t)(2), or the distribution is allocable to any nontaxable portion of the in‑plan Roth rollover.

24

A plan would not be required under proposed §1.414(v)-2(c)(3)(i) to have such practices and procedures in place in order to correct a pre-tax catch-up contribution that is a catch-up contri‑

bution because it exceeds an employer-provided limit as described in §1.414(v)-1(b)(1)(ii). A plan would also not be required to have such practices and procedures in place in order to correct

a pre-tax elective deferral that is a catch-up contribution because it exceeds the ADP limit as described in §1.414(v)-1(b)(1)(iii). This is because these elective deferrals are not determined to

be catch-up contributions under §1.414(v)‑1(c)(3) until the last day of the plan year of deferral or in the following plan year.

22

Bulletin No. 2025–40

427

September 29, 2025

requirement has made pre-tax elective

deferrals for a calendar year that equal the

section 401(a)(30) limit for the taxable

year that begins in the calendar year, then

subsequent elective deferrals made by

the participant in the calendar year would

automatically be made as designated Roth

contributions, even if the participant has

not made an affirmative election to make

catch‑up contributions as designated Roth

contributions. Similarly, if such a partic‑

ipant has made pre-tax elective deferrals

for a limitation year that result in the par‑

ticipant’s annual additions for the limita‑

tion year equaling the section 415(c) limit,

then subsequent elective deferrals made

by the participant in the limitation year

would automatically be treated as desig‑

nated Roth contributions.

Although commenters generally agreed

that a plan should be permitted to provide

for a deemed Roth catch‑up election,

commenters requested that the final reg‑

ulations not include the proposed require‑

ment that a plan provide for the deemed

Roth catch-up election in order for the

Form W‑2 or in‑plan Roth rollover correc‑

tion method to be used to correct a pre‑tax

elective deferral that exceeds a statutory

limit. Commenters argued that a deemed

Roth catch‑up election could be viewed as

impractical or less efficient than collecting

affirmative designated Roth contribution

elections, would need to be negotiated

with respect to collectively bargained

plans, and potentially could be prohibited

under State or local law.

Section 1.414(v)‑2(c)(3)(i)(B) of the

final regulations generally retains the

requirement that a plan provide for a

deemed Roth catch-up election in order

for the Form W‑2 or in‑plan Roth rollover

correction method to be used to correct

a pre‑tax elective deferral that exceeds

a statutory limit.25 However, the Trea‑

sury Department and the IRS note that

§1.401(k)‑1(f)(5)(iv) of the final regula‑

tions also retains the requirement that a

plan offer to a participant who is subject

to a deemed Roth catch-up contribution

election an effective opportunity to make

a different election (that is, an election to

make pre-tax catch-up contributions or

to make no catch-up contributions). The

Treasury Department and the IRS believe

that concerns relating to compliance

with the terms of a collective bargaining

agreement or applicable State or local

law would be mitigated by a participant’s

ability to make an election to override any

deemed Roth treatment by the plan.

In addition, in response to commenters

and as noted previously in section III.B.1.

of this preamble, the final regulations

reduce the potential administrative bur‑

den of this requirement by removing the

requirement that a plan take into account

any designated Roth contributions that a

participant made earlier in a calendar year

for purposes of applying the deemed Roth

catch‑up election. Thus, under the final

regulations, in order for a plan to use the

Form W‑2 or in‑plan Roth rollover correc‑

tion method to correct a pre‑tax elective

deferral that exceeds a statutory limit, the

plan must provide that the elective defer‑

rals of a participant who is subject to the

Roth catch-up requirement are automati‑

cally treated as designated Roth contri‑

butions either: (1) after the participant’s

total elective deferrals made during the

calendar year (including elective deferrals

made as designated Roth contributions)

exceed the section 401(a)(30) limit on

elective deferrals for the taxable year that

begins in the calendar year, or (2) after

the participant’s pre-tax elective deferrals

made during the calendar year exceed the

section 401(a)(30) limit on elective defer‑

rals for the taxable year that begins in the

calendar year.

In addition, §1.414(v)‑2(c)(3)(i)(B)

clarifies that, although a plan must provide

a participant who is subject to the deemed

Roth catch‑up election with an effective

opportunity to make a new election that

is different than the deemed election, if a

plan implements a participant’s affirma‑

tive pre‑tax catch‑up contribution election,

the plan must then determine whether the

participant’s affirmative pre‑tax catch‑up

contribution election is permissible (tak‑

ing into account any designated Roth con‑

tributions made by the participant earlier

in the calendar year). If the participant’s

affirmative pre‑tax catch‑up contribution

election is impermissible, then the sec‑

tion 414(v)(7) failure generally must be

corrected.

The final regulations also provide that,

in the case of an employee participating in

a section 403(b) plan for whom the sec‑

tion 402(g) limit is increased pursuant to

section 402(g)(7), the plan is permitted

to provide that the automatic treatment of

additional elective deferrals as designated

Roth contributions applies either: (1) after

the employee’s elective deferrals under

the plan for the calendar year exceed the

section 401(a)(30) limit on elective defer‑

rals for the taxable year that begins in the

calendar year, increased by the amount

described in section 402(g)(7)(A), or

(2) after the employee’s pre-tax elective

deferrals under the plan for the calendar

year exceed the section 401(a)(30) limit

on elective deferrals for the taxable year

that begins in the calendar year, increased

by the amount described in section 402(g)

(7)(A).

Similarly, the final regulations provide

that, in the case of an eligible governmen‑

tal 457(b) plan, the automatic treatment of

additional elective deferrals as designated

Roth contributions generally applies with

respect to the corresponding limit of sec‑

tion 457(b)(2). However, a plan is permit‑

ted to provide that the automatic treatment

of additional elective deferrals as desig‑

nated Roth contributions applies once the

amount deferred under the plan for the

taxable year exceeds the section 457(b)(3)

limit for the participant.

Under proposed §1.414(v)‑2(c)(3)(ii),

a plan would not fail to meet the require‑

ment to have in place practices and proce‑

dures that are designed to result in compli‑

ance with the Roth catch-up requirement

at the time an elective deferral is made

merely because the plan determines the

applicability of the Roth catch-up require‑

ment to a participant solely on the basis

of the participant’s FICA wages from

the employer sponsoring the plan for the

preceding calendar year as reported on

a timely-filed Form W-2 with respect to

the participant. However, as explained in

section III.C.3.a of the preamble to the

proposed regulations (“Prerequisite to

The final regulations do not include the proposed requirement that if a participant who is subject to the deemed Roth catch‑up election has made pre-tax elective deferrals for a limitation

year that result in the participant’s annual additions for the limitation year equaling the section 415(c) limit, then subsequent elective deferrals made by the participant in the limitation year

must automatically be treated as designated Roth contributions.

25

September 29, 2025

428

Bulletin No. 2025–40

Correct Certain Section 414(v)(7) Fail‑

ures Under the New Correction Meth‑

ods”), the fact that a plan would not fail

to meet the requirement to have in place

practices and procedures did not mean

that the plan would not have to correct any

pre-tax catch-up contributions that should

have been designated Roth contributions

if the amount of a participant’s FICA

wages for the preceding calendar year that

is timely reported on a Form W-2 is later

determined to be incorrect. The Treasury

Department and the IRS invited comments

on whether there are scenarios in which it

would not be appropriate to require cor‑

rection of pre-tax catch-up contributions

that are required to be designated Roth

contributions on the basis of a subsequent

determination that the amount of FICA

wages reported on the Form W-2 was

incorrect. The final regulations retain the

rule included in proposed §1.414(v)‑2(c)

(3)(ii). However, in response to com‑

ments received and as explained in sec‑

tion III.C.4 of this Summary of Com‑

ments and Explanation of Revisions

(“Correction not required in certain cir‑

cumstances”), the final regulations do not

require the correction of a section 414(v)

(7) failure if a participant became subject

to section 414(v)(7)(A) solely because the

participant’s FICA wages for the calendar

year preceding the calendar year in which

the taxable year begins were not deter‑

mined to exceed the Roth catch-up wage

threshold until after the deadline for cor‑

rection in §1.414(v)‑2(c)(3)(iii).

b. Deadline to correct section 414(v)(7)

failures

Under proposed §1.414(v)-2(c)(3)(iii),

the deadline to correct a section 414(v)

(7) failure would depend on which limit

is the basis for the pre-tax elective defer‑

ral being designated a catch-up contribu‑

tion. For example, if the elective defer‑

ral is a catch-up contribution because it

exceeds the section 401(a)(30) limit on

elective deferrals, then, consistent with

§1.402(g)‑1(e), the deadline to com‑

plete the corrective steps under proposed

§1.414(v)-2(c)(2) would be April 15 of the

calendar year following the calendar year

for which the elective deferral was made.

Further, the proposed regulations would

include separate deadlines with respect to

Bulletin No. 2025–40

the section 415(c) limit and with respect

to the ADP limit or an employer‑provided

limit.

Commenters generally recommended

that the correction deadlines set forth in

the proposed regulations be simplified and

that a later deadline should be provided

under the final regulations. Commenters

provided various suggestions for a sin‑

gle correction deadline (for example, the

close of the calendar year following the

calendar year in which the pre‑tax elective

deferrals were made) or for extended cor‑

rection deadlines in certain circumstances

(for example, with respect to the ADP

limit, 12 months after the close of the

plan year in which the excess contribution

arose). One commenter also requested the

consideration of correction options that

would limit administrative burden to plans

and prevent double taxation for partici‑

pants (for example, by not requiring the

inclusion of a pre-tax deferral in excess

of the section 401(a)(30) limit in a partic‑

ipant’s gross income for the year in which

the deferral was made and for the year in

which the participant receives a corrective

distribution).

In response to these comments,

§1.414(v)‑2(c)(3)(iii) of the final regu‑

lations provides that, if a section 414(v)

(7) failure arises with respect to an elec‑

tive deferral that is a catch-up contribu‑

tion because it exceeds a statutory limit

within the meaning of §1.414(v)-1(b)

(1) (which would include, for example,

the section 401(a)(30) limit and the sec‑

tion 415(c) limit), the deadline to com‑

plete all corrective steps required under

§1.414(v)‑2(c)(2) in order to avoid a

qualification failure is the last day of the

taxable year following the taxable year for

which the elective deferral was made. If

the section 414(v)(7) failure arises with

respect to an elective deferral that is a

catch-up contribution because it exceeds

an employer-provided limit as described

in §1.414(v)‑1(b)(1)(ii) or the ADP limit,

the deadline to complete the corrective

steps required under §1.414(v)‑2(c)(2) in

order to avoid a qualification failure is the

last day of the plan year following the plan

year for which the catch-up contribution

was made.

However, a pre-tax elective deferral that

must be corrected due to a section 414(v)

(7) failure is not treated as a catch-up con‑

429

tribution prior to the date that the failure

is corrected under §1.414(v)‑2(c)(2). This

means that if there are consequences for

failing to be a catch-up contribution which

apply before the deadline for making the

correction in §1.414(v)‑2(c)(3)(iii), those

consequences will apply with respect to

the additional elective deferral (even if the

correction is made by that deadline).

For example, under §1.414(v)‑2(c)(3)

(iii)(A), in the case of an elective defer‑

ral that is a catch-up contribution because

it exceeds the section 401(a)(30) limit

on elective deferrals, if all corrective

steps required under §1.414(v)‑2(c)(2)

are not completed by April 15 following

the close of the taxable year for which

the elective deferral was made, then the

excess deferral will not be treated as

having been corrected by the deadline in

§1.402(g)‑1(e)(2)(ii). Thus, the excess

deferral will be subject to the tax treat‑

ment rules of §1.402(g)‑1(e)(8)(iii). Sim‑

ilarly, if a section 414(v)(7) failure arises

with respect to an elective deferral that is

a catch-up contribution because it exceeds

an employer‑provided limit, the contribu‑

tion is not excluded from being taken into

account as a catch‑up contribution for pur‑

poses of the ADP test of section 401(k)(3)

pursuant to §1.401(k)‑2(a)(5)(iii) before

the correction for the section 414(v)(7)

failure occurs.

Section 1.414(v)-2(c)(3)(iii)(C) of the

final regulations provides that if a sec‑

tion 414(v)(7) failure arises with respect

to an elective deferral that is a catch-up

contribution because it exceeds the ADP

limit, the contribution is not excluded

from the requirement to distribute excess

contributions as a catch-up contribution

pursuant to §1.401(k)-2(b)(4)(v) before

the correction for the section 414(v)(7)

failure occurs. The final regulations align

with the existing section 401(k) regu‑

lations for the correction of an excess

contribution by clarifying that, if a plan

does not correct excess contributions

within 2-1⁄2 months after the close of the

plan year for which the excess contribu‑

tions are made (as extended to 6 months

under §1.401(k)‑2(b)(5)(iii) in the case

of certain applicable employer plans that

include an eligible automatic contribu‑

tion arrangement within the meaning of

section 414(w)), then the employer will

be liable for a 10% excise tax under sec‑

September 29, 2025

tion 4979 on the amount of the excess con‑

tributions that were not distributed timely.

4. Correction not required in certain

circumstances

Commenters requested that Treasury

and the IRS address whether there are

circumstances in which a pre‑tax elective

deferral in excess of an applicable limit

that fails to comply with section 414(v)

(7)(A) would not need to be corrected in

order for section 414(v)(1) to apply and

requested that correction not be required

in certain circumstances. Comment‑

ers requested that the final regulations

include a de minimis exception under

which pre-tax elective deferrals that do

not exceed a specified threshold (for

example, $250) would not need to be

corrected. One commenter also requested

that the final regulations permit a plan

to rely on a participant’s final Form W‑2

for a year when determining whether the

participant is subject to the Roth catch-up

requirement and not require correction

in the event that the participant’s FICA

wages are later adjusted. An example

would be a participant whose Form W‑2

for the preceding calendar year indicates

that FICA wages did not exceed the Roth

catch‑up wage threshold, but whose

FICA wages are later adjusted as a result

of an employment tax examination, if the

adjusted FICA wages for the participant

exceed the Roth catch‑up wage thresh‑

old.

In response to these comments,

§1.414(v)‑2(c)(4) sets forth two circum‑

stances in which a pre‑tax elective defer‑

ral in excess of an applicable limit that

fails to comply with section 414(v)(7)(A)

would not need to be corrected in order

for the elective deferral to be treated as a

catch‑up contribution. First, correction is

not required if the amount of the pre‑tax

elective deferral that was required to be

a designated Roth contribution does not

exceed $250. For purposes of applying

this $250 threshold, earnings and losses

on the pre-tax elective deferral are not

taken into account. Second, correction

is not required if the participant became

subject to section 414(v)(7)(A) solely

because the participant’s FICA wages for

the calendar year preceding the calendar

year in which the taxable year begins

were not determined to exceed the Roth

catch-up wage threshold until after the

deadline for correction in §1.414(v)‑2(c)

(3)(iii).

One commenter requested that the

final regulations not require a correction

after a significant passage of time (for

example, after the statute of limitations

has run on the participant’s tax return

for the taxable year in which the pre‑tax

elective deferral should have been made

as a designated Roth contribution) or

after the amount that would otherwise

be required to be transferred or directly

rolled over to the participant’s desig‑

nated Roth account has been distributed

from the plan. As a general matter, in

order to remain qualified, any failure to

meet the qualification requirements must

be corrected even if all applicable stat‑

utes of limitations on assessment for the

year in which the failure occurred have

closed. The final regulations do not alter

this general principle.

Another commenter requested that the

final regulations address the correction

method for a participant who is subject

to the Roth catch-up requirement, is per‑

mitted to make pre-tax catch-up contri‑

butions, and subsequently takes a distri‑

bution of the participant’s entire account

balance before the plan has an opportunity

to correct the failure. Distribution of such

an amount would satisfy the qualifica‑

tion requirements without the need for

any additional rules in these final regula‑

tions. However, under §1.402(c)‑2(c)(3)

(i) through (iii), the portion of the distri‑

bution attributable to the pre-tax catch-up

contributions would not be an eligible

rollover distribution.

D. Other issues related to applicable

employer plans

1. Safe harbor section 401(k) plans

One commenter requested confir‑

mation that a plan amendment that is

made pursuant to section 603 of the

SECURE 2.0 Act would not be a prohib‑

ited mid‑year change described in sec‑

tion III.D of Notice 2016‑16, 2016‑7 IRB

318.26 The Treasury Department and the

IRS have determined that, for purposes

of section III.D of Notice 2016‑16, a plan

amendment that is made pursuant to sec‑

tion 603 of the SECURE 2.0 Act, or any

regulation relating to that provision, is not

a prohibited mid‑year change.

2. Eligible governmental 457(b) plans

One commenter requested clarifi‑

cation that correction methods similar

to the in‑plan Roth rollover correction

method would be available to an eligi‑

ble governmental 457(b) plan for a vio‑

lation of section 457(c). The commenter

noted that, in the proposed regulations,

the deadlines for using the in‑plan Roth

rollover correction method would refer

to violations of section 401(a)(30), which

does not apply to section 457(b) plans.

As described in section III.C.3.b of this

Summary of Comments and Explanation

of Revisions (“Deadline to correct sec‑

tion 414(v)(7) failures”), a single correc‑

tion deadline applies for all section 414(v)

(7) failures that arise with respect to an

elective deferral that is a catch‑up contri‑

bution because it exceeds a statutory limit

within the meaning of §1.414(v)‑1(b)(1).

A statutory limit within the meaning of

§1.414(v)‑1(b)(1) includes the limit pro‑

vided in section 457(b)(2) (without regard

to section 457(b)(3)).

Commenters also requested that eli‑

gible governmental 457(b) plans be per‑

mitted to include a deemed Roth catch‑up

election, as permitted for section 401(k)

Section 1.401(k)‑3(e)(1) provides that a plan will fail to satisfy the requirements of section 401(k)(12) and 401(k)(13) and §1.401(k)‑3 unless plan provisions that satisfy the safe harbor plan

rules of §1.401(k)‑3 are adopted before the first day of the plan year and remain in effect for an entire 12‑month plan year. However, the safe harbor plan regulations set out several excep‑

tions to this requirement and permit additional exceptions to be provided in guidance of general applicability published in the Internal Revenue Bulletin. Notice 2016‑16 provides guidance

regarding mid‑year changes (as defined in section III.A of Notice 2016‑16) to a safe harbor plan. Under that guidance, with the exception of certain amendments that are subject to regulatory

conditions (as described in section III.B of Notice 2016‑16) and certain prohibited mid‑year changes described in section III.D of Notice 2016‑16, a mid‑year change is permitted provided

that, if it changes a plan’s required safe harbor notice content, the notice and election opportunity conditions in section III.C of Notice 2016‑16 are satisfied.

26

September 29, 2025

430

Bulletin No. 2025–40

and section 403(b) plans. These final reg‑

ulations do not make any revisions to the

regulations relating to eligible governmen‑

tal 457(b) plans because those regulations

do not currently provide for the inclusion

of a qualified Roth contribution program

in an eligible governmental 457(b) plan.27

IV. Applicability Date Issues

The

proposed

amendments

to

§§1.401(k)‑1 and 1.403(b)‑3 were pro‑

posed to apply for taxable years beginning

after December 31, 2023. The proposed

amendments to §1.414(v)‑1 generally

were proposed to apply with respect to

contributions in taxable years that begin

more than 6 months after the date that

final regulations amending §1.414(v)‑1

are issued. However, under the proposed

regulations, a taxpayer would have been

permitted to elect to apply the regulatory

provisions relating to sections 109 and

117 of the SECURE 2.0 Act as early as the

statutory applicability dates.

For a plan that is not maintained pursu‑

ant to a collective bargaining agreement,

proposed §1.414(v)‑2 was proposed to

apply with respect to contributions in tax‑

able years beginning more than 6 months

after the date that final regulations add‑

ing §1.414(v)‑2 to the Code of Federal

Regulations are issued. For a plan that is

maintained pursuant to one or more col‑

lective bargaining agreements, proposed

§1.414(v)‑2 was proposed to apply with

respect to contributions in taxable years

beginning after the later of the first tax‑

able year described in the preceding sen‑

tence, or the first taxable year that begins

after the date on which the last collective

bargaining agreement related to the plan

that is in effect on December 31, 2025,

terminates (determined without regard

to any extension of those agreements).

However, under the proposed regula‑

tions, a plan would be permitted to apply

§1.414(v)‑2 with respect to contributions

in taxable years beginning after Decem‑

ber 31, 2023.

Many commenters requested a later

applicability date for the final regulations

and a reasonable, good-faith standard for

interpretation of the statute in advance of

the applicability date of the final regula‑

tions. Some of these commenters specif‑

ically requested delays for governmental

plans or for plans that are maintained pur‑

suant to one or more collective bargaining

agreements. Other commenters requested

an extension of the administrative transi‑

tion period provided under Notice 202362.

In general, the applicability dates under

the final regulations are based on the appli‑

cability dates set forth in the proposed reg‑

ulations. Thus, for example, §1.414(v)‑2

is generally applicable for taxable years

beginning after December 31, 2026. The

Treasury Department and the IRS have

determined that this regulatory applica‑

bility date provides an adequate period for

implementation of the provisions of the

final regulations. The final regulations do

not extend or modify the administrative

transition period provided under Notice

2023‑62.

However, in response to comments,

§1.414(v)-2(e)(2)(iii) of the final regu‑

lations extends the regulatory applica‑

bility date of §1.414(v)‑2 in the case of

a governmental plan within the meaning

of section 414(d), as described in the

Applicability Dates section of this pre‑

amble. In addition, the Treasury Depart‑

ment and the IRS understand that mul‑

tiemployer plans would benefit from a

further extended applicability date for

the Roth catch‑up requirement because

of the unique issues faced by those plans.

For example, multiemployer plans do

not have access to or control over their

contributing employers’ payroll sys‑

tems and thus must implement com‑

plex administrative coordination proce‑

dures to comply with the Roth catch‑up

requirement. Therefore, in response to

comments, §1.414(v)-2(e)(2)(ii) of the

final regulations provides that if that

plan is a multiemployer plan as defined

in section 414(f), section 414(v)(7) is

deemed satisfied until the first taxable

year described in the Applicability Dates

section of this preamble.

Applicability Dates

The amendments to §§1.401(k)-1 and

1.403(b)-3 apply for taxable years begin‑

ning after December 31, 2023. The amend‑

ments to §1.414(v)‑1 apply with respect to

contributions in taxable years beginning

after December 31, 2026. However, the

regulations permit a taxpayer to elect to

apply (1) §1.414(v)‑1(c)(2)(ii)(C) and (c)

(2)(iii)(C) (relating to the higher catch-up

limit for certain newly-established SIM‑

PLE plans) with respect to taxable years

beginning after December 31, 2023, and

(2) §1.414(v)‑1(c)(2)(i)(B), (c)(2)(ii)(B),

and (c)(2)(iii)(B) (relating to the higher

catch-up limit applicable during the tax‑

able year of attainment of age 60 through

63) with respect to taxable years begin‑

ning after December 31, 2024.

For a plan that is not maintained pur‑

suant to a collective bargaining agreement

and not a governmental plan within the

meaning of section 414(d), §1.414(v)‑2

applies with respect to contributions in

taxable years beginning after December

31, 2026. For a plan that is maintained

pursuant to one or more collective bar‑

gaining agreements, §1.414(v)‑2 applies

with respect to contributions in taxable

years beginning after the later of the first

taxable year described in the preceding

sentence, or the first taxable year that

begins after the date on which the last

collective bargaining agreement related to

the plan that is in effect on December 31,

2025, terminates (determined without

regard to any extension of those agree‑

ments). Further, if that plan is a multiem‑

ployer plan as defined in section 414(f),

section 414(v)(7) is deemed satisfied until

the first taxable year beginning after the

date on which the last collective bargain‑

ing agreement related to the plan that is in

effect on November 17, 2025 terminates

(determined without regard to any exten‑

sion to those agreements). In the case of a

governmental plan within the meaning of

section 414(d), §1.414(v)-2 applies with

respect to contributions in taxable years

beginning after the later of the first taxable

year beginning after December 31, 2026,

On June 22, 2016, proposed regulations relating to the inclusion of a qualified Roth contribution program in an eligible governmental 457(b) plan were published in the Federal Register

(81 FR 40548) and those proposed regulations have not been finalized. The comments received regarding eligible governmental 457(b) plans in response to the proposed regulations under

section 414(v) will be taken into account for purposes of future regulations under section 457(b).

27

Bulletin No. 2025–40

431

September 29, 2025

or the first taxable year beginning after the

close of the first regular legislative session

of the legislative body with the authority

to amend the plan that begins after Decem‑

ber 31, 2025. However, a plan is permitted

to apply §1.414(v)-2 with respect to con‑

tributions in taxable years beginning after

December 31, 2023.

Prior to the applicability date of the

final regulations, a reasonable, good

faith interpretation standard applies with

respect to the statutory provisions reflected

in the final regulations. For example, with

respect to contributions in taxable years

prior to the applicability date of the final

regulations, this standard would be met

if the determination of whether a partici‑

pant’s FICA wages for the preceding cal‑

endar year exceeded the Roth catch‑up

wage threshold is made by referencing the

FICA taxes imposed by sections 3101(b)

and 3111(b) (rather than sections 3101(a)

and 3111(a)).

Special Analyses

I. Regulatory Planning and

Review‑‑Economic Analysis

These final regulations are not subject

to review under section 6(b) of Executive

Order 12866 pursuant to the Memoran‑

dum of Agreement (July 4, 2025) between

the Treasury Department and the Office

of Management and Budget regarding

review of tax regulations.

II. Paperwork Reduction Act

The Paperwork Reduction Act of 1995

(44 U.S.C. 3501-3520) requires that a

Federal agency obtain the approval of

the Office of Management and Budget

(OMB) before collecting information

from the public, whether such collection

of information is mandatory, voluntary,

or required to obtain or retain a benefit. A

Federal agency may not conduct or spon‑

sor, and a person is not required to respond

to, a collection of information unless the

collection of information displays a valid

control number.

These regulations contain reporting

requirements, contained in §1.414(v)-2(c),

that relate to corrections of pre-tax elec‑

tive deferrals that are catch-up contribu‑

tions subject to the requirement under

September 29, 2025

section 414(v)(7)(A) of the Code to be

designated Roth contributions. These

collections of information generally will

be used by the IRS for tax compliance

purposes and may involve submission

of a Form 1099-R or a Form W-2 to the

IRS. The Form 1099-R and its associated

burden are approved by the OMB under

1545-0119. The Form W-2 and its asso‑

ciated burden are approved by the OMB

under 1545-0029. The regulation does not

change the reporting procedures already

established for these forms.

The regulations also contain a record‑

keeping requirement that plan admin‑

istrators maintain written practices and

procedures designed to result in real-time

compliance with certain requirements

of section 414(v)(7)(A). These record‑

keeping requirements are expected to be

usual and customary business practices

that impose no additional burden on

respondents. Therefore, the recordkeep‑

ing requirement does not require OMB

approval under 5 CFR 1320.3(b)(2).

preceding these regulations was submitted

to the Chief Counsel for Advocacy of the

Small Business Administration for com‑

ment on their impact on small businesses

and no comments were received.

III. Regulatory Flexibility Act

Executive Order 13132 (Federalism)

prohibits an agency from publishing any

rule that has federalism implications if

the rule either imposes substantial, direct

compliance costs on State and local gov‑

ernments, and is not required by statute,

or preempts State law, unless the agency

meets the consultation and funding

requirements of section 6 of the Executive

order. The regulations do not have fed‑

eralism implications, impose substantial

direct compliance costs on State and local

governments, or preempt State law within

the meaning of the Executive order.

Pursuant to the Regulatory Flexibility

Act (5 U.S.C. chapter 6), it is hereby cer‑

tified that these regulations will not have

a significant economic impact on a sub‑

stantial number of small entities. These

regulations will affect individuals and

businesses, some of which may be small

entities.

Even if a substantial number of small

entities will be affected, the economic

impact of these regulations is not expected

to be significant. As discussed in the

Paperwork Reduction Act section of this

preamble, these regulations may involve

reporting and ordinary recordkeeping but

are not expected to result in an increase in

estimated burden. Any additional record‑

keeping or administrative costs resulting

from the changes relating to catch-up

contributions that apply to certain sec‑

tion 401(k) plans, section 403(b) plans,

and eligible governmental 457(b) plans

sponsored by small entities are consis‑

tent with existing procedures and are not

expected to be significant. Therefore, a

regulatory flexibility analysis under the

Regulatory Flexibility Act is not required.

Pursuant to section 7805(f) of the

Code, the notice of proposed rulemaking

432

IV. Unfunded Mandates Reform Act

Section 202 of the Unfunded Mandates

Reform Act of 1995 requires that agencies

assess anticipated costs and benefits and

take certain other actions before issuing a

final rule that includes any Federal man‑

date that may result in expenditures in any

one year by a State, local, or Tribal gov‑

ernment, in the aggregate, or by the pri‑

vate sector, of $100 million in 1995 dol‑

lars, updated annually for inflation. The

regulations do not include any Federal

mandate that may result in expenditures

by State, local, or Tribal governments,

or by the private sector, in excess of that

threshold.

V. Executive Order 13132: Federalism

VI. Congressional Review Act

Pursuant to the Congressional Review

Act (5 U.S.C. 801 et seq.), the Office of

Information and Regulatory Affairs desig‑

nated this rule as a major rule, as defined

by 5 U.S.C. 804(2).

Statement of Availability of IRS

Documents

IRS Revenue Procedures, Revenue

Rulings notices, and other guidance cited

in this document are published in the

Internal Revenue Bulletin (or Cumula‑

tive Bulletin) and are available from the

Bulletin No. 2025–40

Superintendent of Documents, U.S. Gov‑

ernment Publishing Office, Washington,

DC 20402, or by visiting the IRS website

at http://www.irs.gov.

Drafting Information

The principal authors of these regula‑

tions are Kara M. Soderstrom, Christina

M. Cerasale, and Jessica S. Weinberger

of the Office of the Associate Chief Coun‑

sel (Employee Benefits, Exempt Organi‑

zations, and Employment Taxes (EEE)).

However, other personnel from the Trea‑

sury Department and the IRS participated

in the development of the proposed regu‑

lations.

List of Subjects in 26 CFR Part 1

Income taxes, Reporting and record‑

keeping requirements.

Adoption of Amendments to the

Regulations

Accordingly, 26 CFR part 1 is amended

as follows:

PART 1―INCOME TAXES

Paragraph 1. The authority citation

for part 1 is amended by adding entries,

in numerical order, for §§1.401(k)-1 and

1.414(v)-2 to read in part, as follows:

Authority: 26 U.S.C. 7805 * * *

*****

Section 1.401(k)-1 also issued under

26 U.S.C. 401(m)(9).

*****

Section 1.414(v)-2 also issued under

26 U.S.C. 414(v)(7)(D).

*****

Par. 2. Section 1.401(k)-1 is amended

by adding paragraphs (f)(5)(iii) through

(v) to read as follows:

§1.401(k)-1 Certain cash or deferred

arrangements.

*****

(f) * * *

(5) * * *

(iii) Deemed Roth catch-up contribution elections. For taxable years begin‑

ning after December 31, 2023, a plan that

satisfies the requirements of paragraph (f)

Bulletin No. 2025–40

(5)(iv) of this section may provide that an

employee who is subject to the require‑

ment under section 414(v)(7) to make any

catch-up contributions as designated Roth

contributions is deemed to have irrevoca‑

bly designated any elective deferrals that

are catch-up contributions as designated

Roth contributions in accordance with

paragraph (f)(1)(i) of this section. In such

a case, the elective deferrals must be-(A) Treated by the employer as not

excludible from the employee’s gross

income, in accordance with paragraph (f)

(2) of this section; and

(B) Maintained by the plan in a sep‑

arate account, in accordance with para‑

graph (f)(3) of this section.

(iv) Election for employees subject to

section 414(v)(7)(A). A plan satisfies the

requirements of this paragraph (f)(5)(iv)

only if under the plan—

(A) An employee who is described in

paragraph (f)(5)(iii) of this section is pro‑

vided an effective opportunity (as deter‑

mined under paragraph (e)(2)(ii) of this

section) to make a new election that is dif‑

ferent than the deemed election described

in paragraph (f)(5)(iii) of this section; and

(B) The deemed election described in

paragraph (f)(5)(iii) of this section ceases

to apply to an employee within a reason‑

able period of time following the date—

(1) The employee ceases to be subject

to the requirement under section 414(v)

(7) to make any catch-up contributions as

designated Roth contributions; or

(2) An amended Form W-2 (Wage and

Tax Statement) is filed or furnished to the

employee indicating that the employee

is not subject to the requirement under

section 414(v)(7) to make any catch-up

contributions as designated Roth contri‑

butions.

(v) Separate election plans. Subject to

the rules in paragraphs (f)(5)(iii) and (iv) of

this section, a plan utilizing a plan design

that permits a participant to make a sepa‑

rate election to treat certain elective defer‑

rals as catch-up contributions during each

payroll period (without regard to whether

the catch-up contributions are catch-up

contributions under §1.414(v)-1(c)(3)),

including a plan design described in

§1.414(v)-1(e)(1)(ii)(A), is permitted to

provide that a participant who is subject

to the requirement under section 414(v)

(7) to make any catch‑up contributions as

433

designated Roth contributions is deemed

to have irrevocably designated as Roth

contributions any elective deferrals that

are made pursuant to the separate election.

*****

§1.403(b)-3 [Amended]

Par. 3. Section 1.403(b)-3 is amended

in paragraph (c)(1) by:

a.

Removing

the

reference

“§1.401(k)-1(f)(1) and (2)” and adding, in

its place, the reference Ҥ1.401(k)-1(f)(1),

(2), (3), and (5)”;

b. Adding the language “(or is deemed

to be so irrevocably designated in accor‑

dance with §1.401(k)-1(f)(5)(iii))” imme‑

diately following the language “otherwise

eligible to make under the plan”; and

c. Removing the language “(within the

meaning of §1.401(k)-1(f)(2))” and add‑

ing, in its place, the language “(within the

meaning of §1.401(k)-1(f)(3))”.

Par. 4. Section 1.414(v)-1 is amended

by:

a. In the last sentence of paragraph

(a)(1), removing the language “this sec‑

tion and §1.402(g)-2” and adding, in

its place, the language “this section and

§§1.414(v)-2 and 1.402(g)-2”;

b. Adding paragraph (a)(4);

c. Revising and republishing paragraph

(c)(2);

d. Adding paragraph (e)(1)(iii); and

e. Revising and republishing para‑

graphs (e)(2) and (i).

The additions and revisions read as fol‑

lows:

§1.414(v)-1 Catch-up contributions.

(a) * * *

(4) Catch-up contributions must be

designated Roth contributions for certain

participants. For provisions relating to the

requirement under section 414(v)(7) that

catch-up contributions made by certain

catch-up eligible participants must be des‑

ignated Roth contributions, see §1.414(v)2.

*****

(c) * * *

(2) Applicable dollar catch-up limit—

(i) Plans other than SIMPLE Plans—(A)

In general. Except as provided in para‑

graph (c)(2)(i)(B) of this section, the appli‑

cable dollar catch-up limit that applies

September 29, 2025

under an applicable employer plan, other

than a SIMPLE 401(k) plan described in

section 401(k)(11) or a SIMPLE IRA plan

described in section 408(p), for a taxable

year is $5,000, as adjusted for changes in

the cost of living under paragraph (c)(2)

(iii)(A) of this section.

(B) Higher limit applicable during

the taxable year of attainment of age 60

through 63. For a taxable year beginning

after 2024, with

This text is long and has been trimmed here. Open the source document for the complete record.