If you are still working and contributing to an Employer Sponsored Retirement plan, this may apply to you. Passed in December 2022, this act includes several mandatory and optional retirement provisions that may impact your 401(k) plan(s). SECURE 2.0 represents an important step forward in helping American workers achieve retirement security.
What you need to know:
The age-50 catch-up contributions must now be made inside the Roth side of a plan, for participants who exceed the compensation threshold.
This provision is mandatory for plans that allow age-50 catch-up contributions. (Note: The special catch-up provisions available to 403(b) and 457(b) plans are not impacted by SECURE 2.0.) • Beginning January 1, 2024, plans that allow age-50 catch-up contributions are required to make those catch-up contributions as Roth contributions for any participants who exceeded $145,000 (as indexed) in FICA compensation (compensation threshold) with the employer in the prior calendar year.
The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Securities and investment advice offered through Investment Planners, Inc. (Member FINRA/SIPC) and IPI Wealth Management, Inc., 226 W. Eldorado Street, Decatur, IL 62522. 217-425-6340.