US EditionA new rule means some 401(k) contributions will no longer be tax-deferred. Here’s who will be affected
Starting in 2026, high earners over $145,000 will lose immediate tax breaks on catch-up contributions in tax-deferred workplace retirement plans, affecting take-home pay.
- In 2026, the Secure 2.0 retirement law will end the immediate tax deferral for catch-up contributions in 401, 403, 457, SEP, and SIMPLE IRA plans, requiring high earners over 50 to make Roth-only contributions or be disallowed.
- Congress removed the pretax catch-up option, eliminating deductions worth $2,775 to almost $4,000 amid $37,000,000,000,000 federal debt and indexing the $145,000 wage threshold.
- Currently, participants age 50 can make additional catch-up contributions above the federal cap, and Roth 401 balances grow tax free with no required minimum withdrawals at age 73.
- If a plan lacks a Roth option, workers age 50 or older lose catch-up contributions, while workers who made below $145,000 in FICA wages face no tax change, Angela Capek said.
- Experts warn that the change means you'll owe more taxes to the federal government now because you lose pre-tax treatment, and advisers recommend high earners adjust plans as proponents encourage more Roth savings.
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Next year a new rule will come into effect that will affect high-income people who make “recovery contributions” in their 401(k) or other deferred-tax retirement plans. The rule, which was created under the Secure 2.0 retirement law, will essentially eliminate the immediate tax exemption for recovery contributions that they receive for most of their other contributions to a 401(k) — or 403(b), 457(b), Simplified Employee Pension Plan (SEP) or SI…
If you’re 50 and older, you might be about to lose a big tax break
Wake up, high-income earning Americans: a tax shift the size of a wrecking ball is barreling toward your retirement account. Starting in 2026, people age 50 and over who make more than $145,000 in wages (from a single employer) will no longer be allowed to make pretax "catch-up" contributions to their 401(k). Instead, those extra dollars — intended to turbocharge retirement savings in your higher-earning years — must go into Roth accounts, meani…
By Juana Sahadi, CNN A new rule will take effect next year that will affect high-income earners who make “catch-up contributions” to their 401(k)s or other tax-deferred workplace retirement plans. The rule, which was created under the Secure Retirement 2.0 Act, will essentially eliminate the immediate tax break for catch-up contributions you receive on most of your other contributions to a 401(k)—or 403(b), 457(b), Simplified Employee Pension (S…
A new rule means some 401(k) contributions will no longer be tax-deferred. Here’s who will be affected
A new rule is going into effect next year that will affect high earners who make “catch-up contributions” in their 401(k)s or other tax-deferred workplace retirement plans.
A New Rule Means Some 401(k) Contributions Will No Longer Be Tax Deferred
FreshSplash/E+/Getty Images A new rule is going into effect next year that will affect high earners who make “catch-up contributions” in their 401(k)s or other tax-deferred workplace retirement plans. The rule, which was created under the Secure 2.0 retirement law, will essentially eliminate the immediate tax break for catch-up contributions that you get for the bulk of your other contributions to a 401(k)……Continue reading…. By: Jeanne Sahadi S…
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