The Problem With 401(k) Catch-Up Contributions for 2024

Please note update as of 8/30/2023: Two-year reprieve granted from Roth catch-up requirement.

Higher-income participants in Sec. 401(k) and similar retirement plans have been given a two-year delay before the new requirement that they must designate their catch-up contributions to those plans as after-tax contributions to Roth IRAs, the IRS announced in Notice 2023-62.

While a 2 year grace period has been issued you should consider beginning to implement Roth components into your plans as soon as possible to be ready! Reach out to us for assistance or more information.

From 8/26/2023, Kiplinger: Last year, the SECURE 2.0 Act substantially changed retirement account rules. Some of these changes have already taken effect and caused confusion. That’s been problematic for some older adults who need clarity on crucial retirement planning aspects, such as when to take required minimum distributions (RMDs).

Another concern involved upcoming changes to rules governing catch-up contributions for 401(k) plans. These changes, which initially weren’t going to be effective until 2024, will require catch-up contributions for higher-income earners to be made on a Roth basis.

Making catch-up contributions on an after-tax Roth basis means paying taxes on your retirement savings during the years when you usually earn more. On the other hand, traditional 401(k) accounts allow you to defer taxes until retirement, which can be advantageous if you anticipate being in a lower tax bracket by then.

401(k) Catch-up contribution changes

  • Under SECURE 2.0, if you are at least 50 years old and earned $145,000 or more in the previous year, you can make catch-up contributions to your employer-sponsored 401(k) account. 
  • But there’s a catch. You would have to make those extra contributions on a Roth basis, using after-tax money. 
  • You wouldn’t be able to get tax deductions on those catch-up contributions as you would with typical 401(k) contributions, but you could withdraw the money tax-free when you retire.
  • The SECURE 2.0 Roth catch-up contribution rule won’t apply to taxpayers making $144,999 or less in a tax year.

What’s the problem? Essentially, when lawmakers drafted the Roth catch-up contribution provisions of SECURE 2.0, certain language was inadvertently left out of the law. As a result, according to the current text of SECURE 2.0, no participant would be able to make catch-up contributions (whether on a pre-tax or Roth basis). 

Congress is aware of this and other drafting errors in SECURE 2.0, and lawmakers will likely make technical correctionsHowever, the mistake complicated challenges with implementing the catch-up contribution change that, until recently, was supposed to be effective next year. 


Copper Leaf Financial, LLC is a fee-only, registered investment advisor, serving clients nationwide from offices in Williston and Rutland, VT. One of the firm’s main areas of focus is on providing 401k retirement plan solutions for businesses. Copper Leaf is part of a group that serves more than 1,500 retirement plans and is helping over 50,000 Americans on their journey to retirement.  Our approach is based on a simple fiduciary promise: to do what’s right for you, your company and your employees, no matter what. In addition to building new plans we offer employers with existing retirement plans a complementary second opinion on the health of their plan.

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