Catch-up contributions for high-earning retirement savers are soon going to be taxed, but 50 organizations are urging the federal government to delay the new rule behind that. As part of Secure 2.0 Act, retirement-focused legislation passed last year, workers 50 and older who earned $145,000 or more in the prior year will only be allowed to make Roth catch-up contributions beginning Dec. 31, 2023. Contributing on a Roth basis will subject them to taxation at the time those contributions are made. As it stands, catch-up contributions can be made before or after taxes, dependent on plan sponsor rules.
Organizations behind the letter, which was addressed to the Department of Treasury and the Internal Revenue Service, include the American Retirement Association, Fidelity Investments, IBM Corporation, the Insured Retirement Institute, the U.S. Chamber of Commerce, as well as state and local retirement systems. The groups state the implementation of this rule comes with “administrative hurdles,” and asked that it be delayed until Jan. 1, 2026. Plan sponsors would have to allow for Roth contributions in their plans, and have a system in place to determine if the worker earned at least $145,000 the year before, a determination some employers cannot make by Jan. 1. There are also two ways to process catch-up contributions, and recordkeepers w …
Article Attribution | Read More at Article Source