IRS Proposes Regulations, Issues Guidance on Catch-Up Contributions

Washington, DC, October 23, 2001 - The Internal Revenue Service has issued proposed regulations on "catch-up" contributions that may be made to retirement plans by individuals age 50 or over. The Institute submitted comments to the Treasury Department with respect to the development of regulatory guidance under the catch-up provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). The IRS also recently issued Announcement 2001-93, which provides guidance on the reporting of catch-up contributions on Form W-2.

The proposed regulations address a variety of issues arising from EGTRRA’s portability provisions, including the following:

• eligibility requirements to make catch-up contributions,
• determination of catch-up contribution amounts,
• treatment of catch-up contributions,
• universal availability, and
• participants in multiple plans.

The regulations are proposed to apply to contributions in taxable years beginning on or after January 1, 2002. Taxpayers may rely on the proposed regulations for guidance pending the issuance of final regulations. To the extent future guidance is more restrictive than the guidance in the proposed regulations, the future guidance will be applied without retroactive effect.

Written or electronic comments and requests to speak at a public hearing (scheduled for February 21, 2002) must be received by January 31, 2002.