What an IRS Change Could Mean for Your Retirement Catch-Up Contributions

What an IRS Change Could Mean for Your Retirement Catch-Up Contributions
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New IRS guidance will delay a portion of SECURE Act 2.0 limiting the type of catch-up contributions made to retirement plans by higher-income participants.


The law would’ve required all such contributions by those over age 50 with prior-year Social Security wages exceeding $145,000 to come in the form of after-tax Roth contributions as of 2024. An Aug. 25 announcement delays that policy by two years as part of an “administrative transition period.”


The change affects participants in 401(k), 403(b), and governmental 457(b) plans. More information on how it may impact Thrift Savings Plan users is available at TSP.gov.


The catch-up contribution limit is $7,500 for 2023, up from $6,500 in 2022. The 2024 limit has not been announced.


[RELATED: More 2023 Retirement Rule Changes]


The two-year delay came after about 200 businesses, financial organizations, retirement funds, and other interested parties requested an extension from members of Congress in a July letter, saying some retirement plans would be forced to eliminate all catch-up contributions as a way to ensure compliance with the new law.


The IRS announcement clarifies such contributions are not prohibited by SECURE 2.0. Consult your financial adviser or tax expert for details on what the change could mean for your retirement planning.


More Retirement Resources

While MOAA does not provide personalized financial advice, there are several resources available to members looking to ensure their financial future.


For more financial resources from MOAA, visit MOAA.org/Finance.


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About the Author

Kevin Lilley
Kevin Lilley

Lilley serves as MOAA's digital content manager. His duties include producing, editing, and managing content for a variety of platforms, with a concentration on The MOAA Newsletter and MOAA.org. Follow him on Twitter: @KRLilley