Letter requests clarification of IRS treatment of Code section 415(c)(3)-compliant definitions of compensation for determining Roth catch-up contributions; eligibility of 457(b) plans for Roth catch-up contribution option
FOR IMMEDIATE RELEASE
Lexington, KY-March 10, 2025—The National Association of Government Defined Contribution Administrators (NAGDCA) today announced that it has sent comments to legal counsel at the U.S. Department of the Treasury and Internal Revenue Service in response to the Notice of Proposed Rulemaking: Catch-Up Contributions (REG-101268-24).
NAGDCA’s 270 governmental plan sponsor members represent 15,000 governments in 49 states. Participants come from every level of state, territorial, and local government, including counties, cities, public safety agencies, school districts, transportation, and utilities. NAGDCA’s members administer governmental deferred compensation and defined contribution plans, including Section 457(b), 401(k), 401(a), and 403(b) plans.
The letter, authored by NAGDCA Executive Director Matt Petersen, references NAGDCA’s comment letter submitted in October 2023. In the 2023 letter, NAGDCA requested IRS and Treasury guidance as to whether the IRS will treat any Code section 415(c)(3)-compliant definition of compensation as a permissible definition to use in determining whether a participant is subject to mandatory Roth catch-up contributions due to prior compensation in excess of the $145,000 threshold in effect for 2024.
According to Matt, “…this approach is consistent with how the IRS and Treasury have historically allowed for a number of permissible definitions of compensation under the general language of Code section 415(c)(3). Further, adopting this position would help avoid the need for complex payroll system changes and technology interface updates at employers and recordkeepers, and reduce the likelihood that a plan failure will result from the need for a plan to use multiple definitions of compensation.”
Further, the letter includes a request for clarification as to whether the Roth catch-up contribution option applies to eligible 457(b) plans, as the proposed regulation only addresses 401(k)s and 403(b)s.
“Plan sponsors of 457(b) plans would be interested in availing themselves of the new correction methods offered under the proposed rule to 401(k) and 403(b) sponsors,” Matt concludes.
Full text of the 2025 comment letter may be accessed here.
Full text of the NAGDCA 2023 comment letter may be accessed here.
ABOUT NAGDCA
NAGDCA is the premier professional association for plan administrators and services providers of government-sponsored defined contribution retirement plans. NAGDCA members include 270 plan sponsors representing 15,000 governments in 49 states. Participants come from every level of state, territorial, and local government, including counties, cities, public safety agencies, school districts, transportation, and utilities. NAGDCA’s members administer governmental deferred compensation and defined contribution plans, including Section 457(b), 401(k), 401(a), and 403(b) plans. To learn more about NAGDCA, visit https://www.nagdca.org/.
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