Dear Members,

The NAGDCA Executive Board and I recently returned from our annual meetings in Washington D.C. where we spoke with legislative staff and representatives from the IRS and Treasury to lobby for regulatory guidance and legislative action that will help your efforts to comply with SECURE 2.0. We held many productive meetings with key staff, and I wanted to take a moment to update you on our progress on a few of our most challenging issues related to Section 603.

This section of SECURE 2.0 will be the most difficult for many of our members to implement because of the Roth and income verification components newly added to age 50 catch-up contributions. Thank you to all who have shared your story and data to help support our efforts to inform Congress and regulators about the difficulties you face.

One aspect of the new law that initially caused concern is the technicality that could be read to eliminate catch-up contributions entirely. We sent a letter in early February to the IRS that suggested a regulatory fix for the error. In subsequent conversations and presentations in different venues, they have indicated that they believe they can follow our approach to fix the problem. While there is still work to be done, we do not anticipate the error identified in Section 603 will cause any disruption to the ability to offer catch-up contributions.

The more important topic in our conversations was the short effective date in Section 603 and the difficulty public plans will have verifying income for their employees. Our strategy to address these concerns has been a two-pronged approach. First, we asked the IRS and Treasury for guidance to recognize governmental plans operating in good faith to comply with the law, even if they are unable to meet the effective date. We also asked them to allow flexibility in how the $145,000 threshold is calculated as long as it falls under any acceptable definition of compensation in IRC Section 415(c)(3). Second, we spoke with key legislative staff and followed with a letter to request a technical correction to SECURE 2.0 codifying an extension of at least two years to implement Section 603 for governmental plans.

In both cases, their responses were positive, but no one would commit to firm timelines for guidance or legislative action. We stressed the importance of a quick resolution because we know many of you need to make decisions for your plans by late summer. We also stressed that one consequence of a lack of guidance could be the temporary elimination of catch-up contributions for tens of thousands of public employees who are currently using them – an outcome antithetical to the intent of SECURE 2.0.

Encouragingly, thirteen other large public sector trade associations have taken notice of this issue and co-signed a letter with us to reinforce NAGDCA’s message. We will continue to advocate on your behalf until the issues you face are resolved. Thank you again for your support and patience as we navigate this very slow process. We understand and share your urgency, and we will update you as soon as we know more.


Matt Petersen
NAGDCA Executive Director