SECURE 2.0 allows employers to make matching contributions to a Roth account but does not require them to do so. Image: Shutterstock.com
By: John Grobe, Federal Career ExpertsGet Ready! Groups such as the Temptations and Rare Earth have exhorted us to get ready, now it’s our turn. Get ready for 2024 and the changes to retirement savings that are being implemented by SECURE 2.0. Some changes from SECURE 2.0 were introduced this year, some will come into effect in 2024, more in 2025, and yet more in 2033.
Beginning next year, RMDs will no longer be required from employer sponsored Roth plans. This will take away one of the advantages that Roth IRAs have over Roth plans. Of course, this only applies to separated participants who are over the age of 73 (or will turn 73) in 2024.
Catch-up contributions made by highly compensated participants will have to be made as Roth contributions. The law defines highly compensated as having wages of $145,000 or more. This number will be indexed annually for inflation. Once again, this doesn’t apply to all participants. Only those who are still employed and are 50 or older (including those who turn 50 during the year) are allowed to make catch-up contributions. Those whose compensation is less than $145,000 will be allowed to choose whether they want their catch-up contributions to be traditional or Roth.
SECURE 2.0 allows employers to make matching contributions to a Roth account but does not require them to do so. The Thrift Savings Plan will decide whether or not to participate in Roth matching.
In 2025, higher catch-up contributions will be allowed for those between 60 and 63. Expect more information on the implementation of this provision next year.
In 2033 the age at which a separated participant must take required minimum distributions will be increased to 75 from the current 73. Just a few short years ago, RMDs had to be taken beginning at 70 ½.
Plus, who knows what Congress has up its sleeve regarding tax laws over the next few years?
Benjamin Franklin famously said, “In this world nothing can be said to be certain except death and taxes.” Taxes themselves may be certain, but the way they are assessed varies based on the laws passed by Congress. At least Congress has not yet legislated changes to death.
John Grobe, President of Federal Career Experts, is an expert in the area of federal employee retirement and benefits. This expertise comes from his 26 year federal career in which he managed the retirement program in a 3,500-employee office of a large federal agency.
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See also,
Calculating Service Credit for Sick Leave At Retirement
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