Congress Inadvertently Eliminates Catch-Up Contributions

Congress Inadvertently Eliminates Catch-Up Contributions

Secure 2.0 made many changes to catch-up contributions. We have discussed those changes - indexing IRA catch-up contributions to inflation, increased catch-up contributions for those age 60 to 63, and Rothification for higher-income earners. But perhaps Congress' biggest change to catch-up contributions is an unintended change. In drafting Secure 2.0, Congress eliminated a provision of the tax code that allowed for increased deferral limits to for retirement plan contributions. That provision may be necessary to allow for catch-up contributions. As the law now reads, no catch-up contributions may be allowable beginning in 2024 (when these changes to the law are effective). Congress will need to correct this. But technical corrections to legislation often takes years to pass, leaving future catch-up contributions in doubt.

Kim & Rosado LLP
www.kimrosado.com

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