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.
- MOAA’s Military State Report Card and Tax Guide includes detailed information on tax breaks available to veterans and family members, as well as the latest updates on what states provide exemptions on military retirement pay.
- MOAA’s financial calculators can help estimate your retirement-plan needs, assist with Required Minimum Distribution planning, and tackle other financial decisions such as home loans and debt restructuring.
- MOAA’s personal finance publications address everything from investment guidance to estate planning, and can serve as a good starting point for your planning.
- MOAA’s Digital Retirement Guide lets you search senior housing options nationwide, with an eye toward veteran-specific needs.
For more financial resources from MOAA, visit MOAA.org/Finance.
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