Issue: HCE in 2025 contributing to regular 401k catch-up contribution.

[howjltx]

Per dmertz suggestion below, I called my plan administrator and ask about the distribute of access contribution where he said since I was converting all my pre-tax (except company matched, we will do this tomorrow morning) I did not have to worry about the $2,700 contributed to pre-tax catchup for tax year 2025. I still fill like since I was HCE I need to do this or it will be returned as excess (see below) where something like this happened before and I did not correct by 15 April that year, the excess was returned and I had to pay tax on it twice, once for the current year and again for the previous year.

@ dmertz wrote:

As a HCE for 2025, if you contributed $2,700 as pre-tax catch-up, that needs to be corrected, otherwise it's treated as an excess contribution.  This would need to be distributes as a return of the excess contribution.  Unless the plan can treat it as their error, I don't think that it can be moved to the designated Roth account.  However, based on the amount shown with code D and code AA in box 12 of your W-2, it would seem that the $9,000 could be considered to be part of your regular elective deferral, not catch-up.  Ask the plan

[dmertz · Accepted solution]

Upon further investigation, it appears that despite the SECURE 2.0 Act saying that catch-up contributions for HCEs for years after 2023 must be Roth, the IRS implemented a 2-year "transition period" by not enforcing this for 2024 and 2025.  So the plan administrator is correct that you don't have to worry about your 2025 catch-up contribution that was made to the traditional 401(k) account.