As the start of a new year approaches, the IRS has announced an update that could affect your retirement planning.
These changes extend the timeline for the new Roth catch-up contribution requirements, giving taxpayers more flexibility
Our firm, Hocheiser CPA, is here to help you navigate these updates and understand what they mean to you.
The IRS has delayed a new rule until 2026 that requires some higher-income individuals to make their extra retirement contributions (called catch-up contributions) as after-tax Roth contributions instead of pre-tax contributions.
๐๐๐ซ๐โ๐ฌ ๐ฐ๐ก๐๐ญ ๐ฒ๐จ๐ฎ ๐ง๐๐๐ ๐ญ๐จ ๐ค๐ง๐จ๐ฐ:
๐๐ ๐ฒ๐จ๐ฎโ๐ซ๐ ๐๐-๐๐ ๐จ๐ซ ๐๐ ๐๐ง๐ ๐จ๐ฅ๐๐๐ซ, you can continue making catch-up contributions after 2023,ย regardless of your income level.
๐๐ ๐ฒ๐จ๐ฎ ๐ญ๐ฎ๐ซ๐ง ๐๐ ๐๐ฎ๐ซ๐ข๐ง๐ ๐ญ๐ก๐ ๐๐๐ฅ๐๐ง๐๐๐ซ ๐ฒ๐๐๐ซ, youโll qualify for a higher โSuper Catch-Upโ contribution limit, allowing you to add more money to your retirement savings than the regular catch-up amount. For most retirement plans, this โSuper Catch-Upโ limit will be the greater of:
ยทย ย ย ย ย ย $10,000
ยทย ย ย ย ย ย 150% of the regular catch-up contribution limit for that year (adjusted for inflation starting in 2026).
Hereโs an example to make it simple:
Regular Catch-Up Limit: $7,500
Super Catch-Up Limit (for ages 60-63): $11,250
If youโre between 50-59 or 64 and older, you can still use the regular catch-up option, but this new rule gives those in the 60-63 age range a chance to boost their retirement savings even more!
The SECURE 2.0 Act allows plans to continue offering this option, so you can boost your retirement savings.
Starting in 2026, employees earning more than $145,000 in prior-year Social Security wages must make catch-up contributions as Roth contributions for their retirement plans.
The transition period gives retirement plan administrators and participants time to adapt to the new requirements smoothly.
This announcement is a great opportunity to revisit your retirement plan and maximize your savings potential. Whether you need clarity on how these changes affect your strategy or want help navigating your options, weโre here to support you every step of the way.
Contact Hocheiser CPA today.
Letโs work together to ensure your financial future is as secure as possible.
