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New Roth Catch-Up Rules

New Roth Catch-Up Rules

June 27, 2023

Last year, when the Setting Every Community Up for Retirement Enhancement 2.0 Act of 2022 ("Secure Act 2.0") was passed, congress made changes to retirement plan catch-up contributions. 1

Starting on January 1, 2024, when a retirement plan catch-up is made, employees with incomes of $145,000+ (subject to a cost of living adjustments) must be Roth contributions. 2

This is not an option to be a Roth contribution; the high-income money is required to be a Roth contribution if it's going in the plan.

Catch-Up provisions are a huge benefit to employees trying to save over the the $22,500 401k limit, allowing them to save up to $30,000 in 2023. Going forward, part of that saving may have to be Roth, which might catch some people off guard.

Here are some examples (based on current contribution amounts):

Sally, age 52, earns $160,000:
401k contribution $22,500 - this can be deductible
Roth 401k Catch-Up $7,500 - must be Roth 
Total contribution: $30,000

Ron, age 60, earns $120,000:
401k contribution $22,500 - this can be deductible
401k Catch-Up $7,500 - this can also be deductible because his income is under $145,000
Total contribution: $30,000

Philip, age 48, earns $120,000:
401k contribution $22,500 - this can be deductible
No catchup is allowed until age 50
Total allowable contribution: $22,500


401k plan sponsors are responsible to make sure their plan is updated and in line with current laws. Failure to do so could lead to penalties and fines.

Honestly, there's no need to let your plan fall behind. We offer a robust process to keep the plans we work with compliant.


1. https://www.appropriations.senate.gov/imo/media/doc/JRQ121922.PDF

2. https://www.iwmfinancial.com/resource-center/retirement/understanding-the-secure-act-2

3. https://www.iwmfinancial.com/resource-center/retirement/catch-up-contributions

Learn more:

Understanding the SECURE Act 2.

Catch-Up Contributions

The Secure Act 2.0 passed, with a lot to go through