How many are getting screwed by the new 401k catch-up rules?

[1srelluc]

So, congress and potato screwed people with the 2024 401k catch-up rules for over 50 making $145k or more per year. You can no longer use the catch-up amount to your pre-tax 401k, this is going to cost more in taxes, I don't want it going to a Roth, trying to keep my taxable income down. Just learned of this.

- 401(k) catch-up contributions will rise for the 2024 calendar year, creating huge impacts for plan participants over 50 years old as well as highly compensated participants

- Any employee with an income of $145,000 or more in 2024 who is eligible to make catch-up contributions must do so as a Roth contribution under changes enacted by SECURE Act 2.0

- Roth contributions aren’t included automatically in 401(k) plans so take this time to thoroughly review your plan documents to ensure employees have options

- The catch-up contribution limit will rise for plan participants between the ages of 60 and 63 in 2025 to $10,000 or 150% of a standard contribution....

Steps 401K Sponsors Can Take to Prepare for SECURE Act 2.0

Read more about the Secure Act 2.0 and what the 2023 catch-up contribution for 401(k) plans is.

anderscpa.com

The higher the pre-tax contribution, the lower your personal taxable base, which mean less taxes for the Big Guy. I really hate the IRS and the government....Fair share my ass.

But, but, but.....Biden promised no new taxes for people earning under $400k a year. Removing deductions is adding a tax without calling it a tax.

This is all academic for me and most of my friends since we are already retired but here might want to take note of what Uncle RICO did for ya.

 

[Thunk]

I stopped putting money into my IRA when democrats started talking of seizing them. Because saving for retirement is raysis!

 

[JGalt]

No, but I'm definitely going to get dinged by the 1099-K for sales over $600 rule.

No new taxes for people earning under $400k a year, my ass.

 

[Flopper]

So, congress and potato screwed people with the 2024 401k catch-up rules for over 50 making $145k or more per year. You can no longer use the catch-up amount to your pre-tax 401k, this is going to cost more in taxes, I don't want it going to a Roth, trying to keep my taxable income down. Just learned of this.

- 401(k) catch-up contributions will rise for the 2024 calendar year, creating huge impacts for plan participants over 50 years old as well as highly compensated participants

- Any employee with an income of $145,000 or more in 2024 who is eligible to make catch-up contributions must do so as a Roth contribution under changes enacted by SECURE Act 2.0

- Roth contributions aren’t included automatically in 401(k) plans so take this time to thoroughly review your plan documents to ensure employees have options

- The catch-up contribution limit will rise for plan participants between the ages of 60 and 63 in 2025 to $10,000 or 150% of a standard contribution....

Steps 401K Sponsors Can Take to Prepare for SECURE Act 2.0

Read more about the Secure Act 2.0 and what the 2023 catch-up contribution for 401(k) plans is.

anderscpa.com

The higher the pre-tax contribution, the lower your personal taxable base, which mean less taxes for the Big Guy. I really hate the IRS and the government....Fair share my ass.

But, but, but.....Biden promised no new taxes for people earning under $400k a year. Removing deductions is adding a tax without calling it a tax.

This is all academic for me and most of my friends since we are already retired but here might want to take note of what Uncle RICO did for ya.

For most people it is not that big a deal because most people don't take advantage of the catchup contribution and very few max out their contribution. In 2024, your 401K contribution limit will be about 23,000 and you will be able to deduct it. If you are over 50 you can contribute an additional 7,500 which was increased from 6,500 in 2023. Although you can not deducted the 7500 in 2024, it will go into a Roth 401K and you will able to withdraw it plus earning in no more than 9 1/2 years tax free . The law also increased catchup contributions for age 60 thru 63 to $10,000.

 

[Harpy Eagle]

I stopped putting money into my IRA when democrats started talking of seizing them. Because saving for retirement is raysis!

If you put the max in during the year, there is no need to catch up.

 

[Thunk]

If you put the max in during the year, there is no need to catch up.

I just pay the taxes now and keep control over it thunk you very much.