'Super Saver' Retirement Savings Opportunity

For those looking to contribute more to their retirement savings, the SECURE 2.0 Act of 2022 provides

an excellent opportunity to do so.

Employees who are 50 and older are allowed to make contributions to their employer-sponsored retirement

plan in excess of the normal limits. For those under 50 the annual limit remains $23,500. However, those aged

50-59 can contribute an extra $7,500 for a total annual contribution of $31,000. For employees aged 60 to 63,

the excess limit is $11,250 for a total annual contribution of $34,750.

In 2025, these ‘catch-up’ contributions can be made to your 401(k) which provides a tax deduction. Beginning

in 2026, however, employees over the age of 50 will be divided into two groups based on annual income:

 Those earning $145,000 or less in the prior year can continue to make their excess, ‘catch-up’

contributions to their regular pre-tax 401(k).

 Those earning more than $145,000 in the prior year will have to contribute their ‘catch-up’ contributions

to a Roth 401(k). As such, those contributions will be after-tax, but qualified withdrawals in retirement

would be tax-free.

Whether you are in the under or over $145,000 earner group, contributions to a Roth 401(k) or Roth IRA can

be an excellent way to diversify your retirement savings and create a tax-free income stream in retirement.

If you are looking to contribute to a Roth IRA, the contribution limit for 2025 for those over 50 is $8,000 (which

includes a $1,000 catch-up). While Roth IRAs are limited to those with modified adjusted gross income less

than $150,000 (individual) or $236,000 (joint), those earning over the limits could consider a backdoor Roth

conversion.

For most investors, saving for retirement is a high priority goal. If you have questions or would like to learn

more about your options in saving for retirement, please feel free to contact us.