Big Change to Catch-Up 401(k) Contributions

1 Big Thing: When Congress passed SECURE 2.0 in 2022, big changes to retirement plans are coming.

All 401(k) catch-up contributions must be Roth (after-tax), starting in 2024 for anyone earning $145,000+ in the prior year. That’s only the beginning.

Why It Matters: Many 401(k) plans either don’t have Roth 401(k) deferrals in their plan document, or highly-paid employees don’t want after-tax contributions.

Bottom Line: While many changes in SECURE 2.0 are favorable to both employers and employees, some are more limiting. All employers will want to look at their plan designs this year to decide what provisions to implement and to make required plan document changes.