Brett Arends’s ROI: What catch-up contribution? Congressional snafu leaves older retirement savers in limbo.

by | Feb 1, 2023 | Stock Market

In case you missed it, when Congress passed the Secure 2.0 retirement bill at the end of December, the legislators who insisted they were trying to give the middle class more tax breaks ended up giving us fewer. They accidentally eliminated a provision that was supposed to let people make extra catch-up contributions to their retirement plans in their early 60s. Instead, the actual law these people passed did the exact opposite: As of next year it will make catch-up contributions impossible.

“According to wording in the current legislation, beginning in 2024, no participants will be able to make catch-up contributions (pretax or Roth),” reports the National Association of Plan Advisers, a trade body affiliated with the American Retirement Association. “The current legislative text puts all such future contributions at risk.” Brian Anderson, editor in chief of industry website, explains: “The bill’s Section 603, which is intended to require that all catch-up contributions be Roth contributions, contains a mistake that inadvertently means no participants will be able to make catch-up contributions (pretax or Roth) beginning in 2024.” Marcia Wagner, a top retirement-law expert and founder of the Wagner Law Group, tells me: “The clear intention of the change was to require catch-up contributions for plan participants to be Roth contributions, unless the plan participant’s FICA compensation was less than $145,000. However, as drafted, the statutory language precludes any catch up contributions to be made in 2024, either pretax or Roth.” In other words, at a time w …

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