Catch-up Contribution Changes for High-Income Earners
Here is a post ONLY applying to working individuals who were will be age 50 or older by the end of 2024, who expect to earn more than $145,000 in 2024. If this does not apply to you, please disregard, unless you’re just fascinated with rules changes.
Long story short, if you max fund your work retirement plan AND take advantage of the allowable catch-up amount, that catch-up amount starting in 2024 must be contributed as a ROTH contribution- you are no longer allowed to make the catch-up contribution in pre-tax dollars.
Note: not all retirement plans offer ROTH contributions as an option, but presumably those that don’t will have to add those for next year to comply with this new rule. Current limits for funding are $22,500 (normal) and $7,500 (catch-up), though these limits may rise incrementally for 2024 as they often have in the past.
Please contact me directly for any clarifying questions about this change. This was a part of recent legislation entitled “Secure Act 2.0,” but this nuance of the legislation should be of note to some of my clients.