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Secure 2.0 Act’s New 401(k) Catch-Up Thumbnail

Secure 2.0 Act’s New 401(k) Catch-Up

As you may recall, we previously covered a major change regarding high wage earners, stemming from the Secure 2.0 Act that was to go into effect January 1, 2024.

That is, Congress’ attempt to raise more tax revenue by requiring those with prior-year wages exceeding $145,000 to make their catch-up contributions (applicable to those age 50 and over) to an after-tax Roth account rather than the traditional pre-tax account.

Employers, plan administrators, and financial institutions were left scrambling to make the changes in retirement plans to accommodate these rules.

As a result, on August 25, 2023, the IRS issued an advance release of their Notice 2023-62. This Notice extends the effective date to January 1, 2026, meaning that for the next two years, high wage earners will still have the choice to allocate their catch-up contributions to their tax-deferred accounts instead of their after-tax accounts.

The goal of this two-year administrative period is to help all involved transition smoothly to the new Roth catch-up rules. Once the final notice is issued, we will share any updates, if significant.


Terri Mozaffarian, CPA, CFP®, Wealth Advisor

This report is intended to be used for educational purposes only and does not constitute a solicitation to purchase any security or advisory services. Past performance is no guarantee of future results. An investment in any security involves significant risks and any investment may lose value. Refer to all risk disclosures related to each security product carefully before investing. Soundmark Wealth Management, LLC, its advisors and its affiliates do not provide tax or accounting services. This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax or accounting advice. Please consult with your tax advisor prior to engaging in any transaction.
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