Certain higher-income individuals who make catch-up contributions to their 401(k) or similar workplace retirement plans must make such contributions on an “after-tax” Roth basis beginning in 2027, according to final regulations made by the Treasury Department and the IRS.
Catch-up contributions are made by people aged 50 and above to their 401(k) and individual retirement accounts (IRAs) over the permissible contribution limit. This allows older people to put more of their earnings toward retirement.
According to the update, which was announced in a Sept. 15 statement by the IRS, employees who earned more than $145,000 from their current employer must make catch-up contributions using after-tax Roth, rather than on a pre-tax basis, starting in 2027….