The IRS has announced that catch-up contributions will be allowed in 2024 and beyond, providing welcome news for higher-income workers with 401(k)s and similar retirement plans. The agency has delayed the implementation of a new rule that would have required catch-up contributions made by people earning over $145,000 to be directed into an after-tax Roth account. Originally set to start in 2024, the rule change will now be postponed until 2026, thanks to a new two-year administrative transition period. This gives savers who are nearing retirement and earning over $145,000 two additional years to make catch-up contributions on a pre-tax basis.
These changes are part of the SECURE Act 2.0, signed into law in late 2022. A provision of the legislation mandated that starting in 2024, any catch-up contributions made by individuals earning over $145,000 would have to be directed into a Roth account. However, the IRS has now provided relief by delaying the implementation of this rule until 2026.
If you are concerned about how these changes may affect your retirement plan, it’s a good idea to speak with a financial advisor who can review your situation and provide recommendations for the future.
For more information, you can read the full article on finance.yahoo.com