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The big change of 401 (K) starts next year. This is what it means for you

    The IRS and the Ministry of the Treasury completed the rules last week for provisions to a law of 2022 that set the threshold for high earners at $ 145,000 (Getty Images)
    The IRS and the Ministry of the Treasury completed the rules last week for provisions to a law of 2022 that set the threshold for high earners at $ 145,000 (Getty Images)

    Changes come to “catch -up” contributions under 401 (K) pension plans for employees aged 50 or older who are considered “high earners”.

    The Internal Revenue Service and the US Department of Treasury completed the rules last week for various provisions of the Secure 2.0 ACT of 2022, which have determined the threshold for a high earner in more than $ 145,000 in wages, according to the Wall Street Journal.

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    The change means that employees aged 50 and older must make their 401 (K) contributions in 2027 after paying taxes. However, some plans can make the change in 2026 said In a press release.

    According to the new rule, high earners will pay taxes on their catch -up money during their high -quality years, in contrast to during retirement, when their income is usually less.

    With the IRS, people aged 50 and older can place an extra $ 7,500 in their 401 (K) plans before they touch the limits before taxes as a 'catching up'. All money on a Roth account can be included tax-free.

    The IRS and the Ministry of the Treasury completed the rules last week for provisions to a law of 2022 that set the threshold for high earners at $ 145,000 (Getty Images)
    The IRS and the Ministry of the Treasury completed the rules last week for provisions to a law of 2022 that set the threshold for high earners at $ 145,000 (Getty Images)

    However, that advantage will disappear for “high earners” who earn more than $ 145,000. According to the report, those savers were now able to lose a deduction of nearly $ 4,000 for a super-collection contribution of $ 11,250.

    The worst thanks to the change are high earners without a Roth 401 (K)-because they cannot make any catch-up contributions at all.

    With catch -up contributions, people aged 50 or older can contribute an extra $ 7,500 on top of the base of $ 23,500 limit for 2025.

    In the meantime, a super-in-handing option has enabled people between the ages of 60 and 63 to increase their catch-up contribution to $ 11,250.

    Contribution limits are adjusted for inflation every year. In 2026, the catch -up limit is expected to be around $ 8,000, while the basic limit is expected to remain the same at $ 11,250.

    The choice between the catch -up contributions of Roth and before taxes can depend on various factors, including the current and future tax discs of the Saver, experts told CNBC.

    The biggest advice for investors is to “not be on the sidelines” as the rules change, the certified financial planner Jared Gagne told The Outlet.