If you're 50 or older, you can funnel extra money into your 401(k), known as "catch-up contributions."
But starting in 2024, higher earners can only make 401(k) catch-up contributions to after-tax Roth accounts, which don't provide an upfront tax break but the funds can grow levy-free.
Fund pretax catch-up contributions for 2023Guarino urges higher earners to fund pretax catch-up contributions in 2023 while they still can because it provides a bigger tax break.
Change provides tax diversificationWhile some higher earners will lose a tax break, the catch-up contribution change is "not necessarily a bad thing," according to Dan Galli, a CFP and owner at Daniel J. Galli & Associates in Norwell, Massachusetts.
Preparing for the catch-up contribution change
Persons:
Peter Cade, deferrals, Roth, Jim Guarino, Baker Newman Noyes, Guarino, they've, Dan Galli, Daniel J, Galli, John Loyd
Organizations:
Getty, Galli & Associates
Locations:
Woburn , Massachusetts, Norwell , Massachusetts, Fort Worth , Texas