Tax Tip #268

SECURE 2.0 made changes that required Retirement Plan participants with prior-year FICA wages (Box 3 of Form W2) over $145,000 (adjusted for inflation) to make age-based catch-up contributions on a Roth basis only. Plans could allow a higher catch-up limit for Retirement Plan participants who attain age 60 through 63 during the calendar year. 

Notes:

• Retirement Plans may include a “deemed” Roth election for impacted employees and must allow for an effective opportunity to elect out of making catch-up contributions.

• Retirement Plans that do not allow for Roth contributions may not offer catch-up contributions for employees who make over the $145,000 threshold.

• Retirement Plans are not required to offer the higher catch-up for ages 60 to 63, but if they do they may not limit catch-up contributions only to those employees. 

If you’re at this magical age and fortunate enough to work for a company that offers catch-up contributions, feel free to reach out to a team member for guidance on what makes the most sense for your situation.