High Earners Get Reprieve With Delay to Rule Change on 401(k) Catch-Ups
The IRS pushed back the date when higher earners will have to direct some contributions to a Roth account, giving employers time to adjust.
Companies offering 401(k) retirement plans are breathing a sigh of relief after the IRS pushed back the deadline for a change that will essentially strip high earners of a tax break.
The Secure 2.0 Act, passed late last year, originally mandated that if 401(k) plans allow older workers to make “catch-up” contributions they must ensure those earning more than $145,000 use an after-tax Roth for their contributions — rather than a traditional pre-tax 401(k) — starting in 2024. But now, companies will have until 2026 before the change takes effect, allowing firms time to adjust to the Biden administration’s package of reforms.