The effects of the SECURE 2.0 Act cover the gamut from profound and far-reaching to the more mundane yet still important—and that includes reporting about certain retirement plans and saving arrangements—including certain Roth arrangements. 
In FS-2024-18, a fact sheet issued May 2, the IRS reminds businesses that beginning with tax year 2023, changes under the SECURE 2.0 Act may affect what they must report on their Forms W-2.
“The SECURE 2.0 Act allows for additional features in various employer retirement plans to encourage use of these plans,” says the IRS. And that can have implications for incentives and contributions that must be reported.
Incentives
Under the SECURE 2.0 Act, employers may offer small financial incentives to employees who choose to participate in 401(k)s and 403(b)s. Those incentives are considered to be part of the employee's income and are subject to regular tax withholding unless there's a specific exemption.
Roth SIMPLE and Roth SEP IRAs
Section 601 of the SECURE 2.0 Act provides that an employer that maintains a SEP or SIMPLE IRA plan can offer participating employees the option of having their salary reduction contributions deposited in a Roth IRA instead of a traditional IRA.
Contributions made at the employee’s election to a Roth SEP or Roth SIMPLE IRA are subject to federal income tax withholding and Social Security and federal unemployment taxes—which should be reported on Form W-2.
Employer contributions to a Roth SEP or Roth SIMPLE IRA, however, are not subject to withholding for federal income tax, FICA or FUTA. Rather, they are reported on Form 1099-R for the year in which the employer allocates them to the individual’s account.
Designated Roth Contributions
Section 604 of the SECURE 2.0 Act says that plans can allow employees to designate certain matching and nonelective contributions made after Dec. 29, 2022, as Roth contributions—which are not subject to withholding for federal income tax, nor Social Security or Medicare taxes.
Designated Roth nonelective and matching contributions, on the other hand, must be reported on Form 1099-R for the year in which they're allocated to an individual's account.
Finding out More
More information on relevant provisions of the SECURE 2.0 Act are contained in Notice 2024-2, which is contained in Internal Revenue Bulletin (IRB) 2024-2, issued on Jan. 8.
IRB 2024-2 is available here: https://www.irs.gov/irb/2024-02_IRB
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