After Congress passed SECURE 2.0 in December of 2022, it changed how retirement plan catch-up contributions would work in the following years. While some of those changes are welcome, others may be more difficult to accept.
The New Rules for Catch-Up Contributions
Unless Congress or the Internal Revenue Service (IRS) makes some changes, retirement account balances may be lower than expected for people making more than $145,000 in 2022. The change, which could start in 2024, is that catch-up contributions made by people earning more than this will have to contribute the catch-up amount to a Roth account.The difference is that contributions to Roth accounts are always made after-tax. It means you will have to pay taxes on the catch-up contribution amounts. You will be paying more in taxes on contributions, but you will be able to withdraw the money tax-free.
