WASHINGTON, D.C. — The Treasury Department and Internal Revenue Service last week rolled out major updates to retirement plan rules and tax guidance for tipped workers, finalizing regulations under the SECURE 2.0 Act and publishing proposed rules for the “no tax on tips” provision of the One, Big, Beautiful Bill.
On Sept. 15, Treasury and the IRS issued final regulations implementing new Roth catch-up contribution requirements. Beginning in 2027, higher-income participants making catch-up contributions to 401(k) and similar plans will be required to treat them as after-tax Roth contributions. The rules also increase catch-up contribution limits for workers ages 60 to 63 and employees in newly established SIMPLE plans.
The final rules, which build on proposals issued in January, include adjustments requested by stakeholders. Among them: allowing plan administrators to aggregate wages from certain separate employers to determine whether the Roth catch-up requirement applies, and clarifying how plans can correct compliance failures or implement deemed Roth elections. The rules also extend applicability deadlines for some government and collectively bargained plans.
“These changes provide clarity for plan sponsors and ensure that retirement savers can make informed decisions as they approach retirement,” Treasury officials said in announcing the regulations.
Four days later, on Sept. 19, the IRS issued proposed guidance to implement the new “no tax on tips” provision. The draft rules outline nearly 70 tipped occupations, from bartenders and baristas to tour guides and water taxi operators, that would qualify under the law.
To claim the deduction, workers must be in a listed occupation and receive “qualified tips,” defined as voluntary payments made directly by customers in cash, card, or other electronic forms. Mandatory service charges, such as automatic gratuities for large restaurant parties, would not count. The rules also explicitly exclude income from illegal or pornographic activity.
The occupations are grouped into eight categories, including food and beverage service, hospitality, entertainment, personal services, and transportation. Each is assigned a Treasury Tipped Occupation Code for reporting purposes.
Public comments on the proposed tip rules are open through Oct. 23 via Regulations.gov.
The twin announcements highlight the IRS’s ongoing effort to implement sweeping provisions of both the SECURE 2.0 Act and the Trump administration’s tax overhaul, while providing taxpayers and businesses with guidance ahead of the 2026 and 2027 compliance deadlines.
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