Oracle PeopleSoft has released PeopleSoft HCM Release Patch 39559412, introducing an additional calculation option for SECURE 2.0 Section 603 Roth catch-up processing. This enhancement gives organizations greater flexibility in determining when eligible catch-up contributions begin rolling over to Roth while supporting IRS-approved calculation methods.

Understanding SECURE 2.0 Section 603

Section 603 of the SECURE 2.0 Act requires employees who are age 50 or older and whose prior-year FICA wages exceed the IRS threshold to make catch-up contributions as after-tax Roth contributions rather than pretax contributions.

The IRS regulations recognize multiple calculation methods for determining when eligible pretax contributions should begin rolling over to Roth. The original PeopleSoft Section 603 enhancement delivered in Image 54, supported one of these methods. Patch 39559412 expands that support by introducing an additional calculation option, giving organizations more flexibility to align PeopleSoft with their retirement plan administration.

Customers can now choose between two IRS-supported calculation methods.

New Alternative Calculation Option

  • Section 414(v)(7) – Pre-tax + Roth (existing functionality)
    • Continues the current behavior by evaluating the combined total of YTD pretax and Roth contributions when determining when eligible pre-tax contributions begin rolling over to Roth. As part of the new enhancement, the existing rollover type has been renamed from Sec 414(v)(7) Roth Rollover to Section 414(v)(7) – Pre-tax + Roth for improved clarity.
  • Section 414(v)(7) – Pre-tax Only (new)
    • Evaluates only YTD pretax contributions when determining when eligible pretax contributions begin rolling over to Roth, allowing organizations to continue accepting pretax contributions even if employees have already made Roth contributions during the year

Recommended Best Practices

To help ensure consistent and accurate payroll calculations, Oracle recommends the following best practices:

  • Configure the same Section 414(v)(7) rollover type across all applicable savings plans that share the same elective deferral limit.
  • Make Special Rollover setup changes only at the beginning of the calendar year before payroll has been processed.
  • Review and update annual IRS limits, including FICA earnings thresholds and elective deferral limits, as part of yearly Benefits and Payroll maintenance.

Following these recommendations helps minimize the risk of inconsistent payroll calculation results and simplifies ongoing plan administration.

IMPORTANT:  Using different Section 414(v)(7) rollover types across savings plans or making Special Rollover setup changes mid-year may affect payroll calculation accuracy. Results from these settings are considered setup-dependent rather than a product calculation issue.

New Configuration Warnings

To help administrators identify configuration changes that could affect payroll calculations, this enhancement introduces new informational warnings on the Savings Plan Table. These informational warnings help administrators review their configuration during setup.

Warnings are displayed when:

  • Section 414(v)(7) Special Rollover setup is changed after payroll has already been processed during the calendar year.
  • Different Section 414(v)(7) rollover types are configured across savings plans that share the same elective deferral limit.

Availability

The Section 603 Benefits Roth Catch-Up: Additional Calculation Option enhancement is available in PeopleSoft HCM Release Patch 39559412.

Supplemental documentation (Doc ID KB916652) is available and includes implementation prerequisites, setup instructions, and examples illustrating calculation methods.

In addition to the online Savings Plan Table warnings, corresponding Payroll warning messages will be delivered in a separate update to further assist administrators in reviewing Section 603 configurations before payroll processing.

Because Section 603 is one component of the broader SECURE 2.0 legislation, Oracle recommends consulting your organization’s legal and tax advisors to determine the calculation method that best supports your retirement plan and other necessary compliance requirements.

For additional information about the IRS regulations supporting Section 603, refer to the Federal Register: https://www.federalregister.gov/d/2025-17865.