Welcome to no longer being able make your 401k catch up contributions pre-tax. You'll get your tax increase and like it!

Thanks Republicans. You let this happen, and did nothing to stop it or reverse it. Disgraceful and despicable.

As usual, the middle aged middle class in their peak earnings get screwed. Both parties are to blame.

It's like every politician of either flavor has failed ECON 101. They want to collect the taxes now; not later after the asset has grown.

Thanks for the link.

You're Welcome. Just don't mess with the 20 percent long term capital gain tax on sales of business assets.

Your Democrats in blue states are giving your tax money to fraudsters, gangsters and illegals.

1) these are catch-up contributions. If you are relying on catching up post 50 I'm sorry but you made mistakes 25 years ago
2) the arrival says in 2026 if you make over $145k your catchup will typically need to be in a Roth 401k. The use of the word typically is vague. Additionally, is this just the catch up portion?

Me thinks you are making a huge mountain of a tiny mole hill.

I disagree. Catch up contributions are only allowed for folks over 50. And it affects anyone who made 150k last year that is actively doing catch up contributions in their 401k. You say it's not a big deal, but it is, especially over the years.

Bottom line is that it is 8500 in extra taxable income that anyone in this category now has.

And also, I'm sick and tired of Republicans acting like they are the party of tax cuts, especially for higher earners, when they let this slide. It's a tax increase, so yeah, I'm put out by it.

It's also categorically rich that you make the assertion that if someone is affected by this, they did something wrong when they were younger.

Let me get this straight:

Your catch-up savings are being "forced" into an account that you'll never have to pay taxes on again, nor will it be subject to RMDs for you or your heirs…and you're mad about it?

That's some A+ angry-old-man performance right there!! Well done.

If your over 50 making more than $145K and your putting your catch up contributions in a traditional 401K instead of a Roth, you need a new financial advisor.

The Chicken Ranch said:

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And also, I'm sick and tired of Republicans acting like they are the party of tax cuts, especially for higher earners, when they let this slide. It's a tax increase, so yeah, I'm put out by it.

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And I am sick and tired of Democrats actually being the party of tax hikes, hating the "rich," hating capitalism, hating the Constitution, hating America, etc.

It's a Tax INCREASE?

So don't make the catchup contributions. Your taxes will be... checks notes... exactly the same.

It's a tax increase for anyone that has been making tax deferred catch up contributions. Now you can no longer do so. So, yes, it's an increase because you can no longer defer that contribution.

The Chicken Ranch said:

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It's a tax increase for anyone that has been making tax deferred catch up contributions. Now you can no longer do so. So, yes, it's an increase because you can no longer defer that contribution.

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read the words you are typing - a removal of a deferral is not an INCREASE. You pay the tax today instead of at time of distribution later. You still pay the tax but tomorrow you pay the tax on the full amount. With the new rule you pay at most 2900 on the 8k. In fact you can stay "flat" and contribute 5100 and come out ahead on the untaxed growth.

But I am sure you've run the math.

At some point voters will realize that there is no difference between a republican and a Democrat. Both are simply using the middle class as a harvest for their own weaponization of government.

Math aside, what you're mocking is essentially Roth conversion ladder strategy, right? It seems you're assuming the OP will be in the same tax bracket upon retirement as they are now.

The Chicken Ranch said:

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Thank you for the sarcastic, rude and condescending post. This is exactly why I loathe posting here, and regret making this thread.

I hate being forced to make tax planning choices, that result in a net immediate tax increase for me, and thought a real discussion of this new law could transpire here. I should have known better.

You don't know my situation, or my planning, or my needs..

Sorry this new law isn't bothersome to anyone but me.

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My post wasn't rude...lighten up. It had a tinge of sarcasm but only because I suck at posting pics and gifs, otherwise I'd of just stuck the "old man yells at clouds" image.

The same entity (the government) that gave you things like: 401ks, Roths, catch-up amounts, corporate matching, etc., has since made an adjustment to their previous decisions that triggered current taxes (rather than later). But instead of just triggering those taxes and saying "suck it up", they still allowed you to put money into a bucket that will never be taxed again while you're alive, and can be inherited tax free. Tax laws change...welcome to life. Hate to break it to you but they're going to change again, almost certainly, before you retire and assuredly during your retirement.

If you weren't already putting/shifting some money into roth, if for nothing more than tax exposure flexibility in retirement, then in all likelihood, the government did you a favor here. High income earners often underestimate the sting that RMD's are going to bring. Additionally, they often miss the tax weight that lands on (successful) heirs when the IRA's are inherited. Diversification of your tax load during retirement is, often times, as important as diversification in your portfolio.

My take is that you didn't get a "real discussion" on the topic because your initial post was posed more as a political rant than a request for discussion. What discussion do you want to have…do you want to know how others are navigating and adjusting to this new requirement or something else?

As RWC said, I get the frustration and perhaps even anger about options being revised or taken away. While not something you may have wanted, this may force you to look at some diversity in your plan that you hadn't looked at before.

That's fair.

But it is political. Undoubtedly I am frustrated, because I feel like this could have been avoided had Republicans not been asleep at the wheel. It's really a big deal. Educated people can make their own decision as to whether or not they need the tax deduction now, or tax feee assets later. I don't like being forced to pay current taxes now on my catch up, when I didn't in the past, and the current net increase in taxes for me that this has caused. I will most certainly be in a lower bracket later, barring drastic changes to the tax code, in retirement especially when my RMDs hit. I don't like the change because I feel it is punitive to middle age high earners. Fact is, I have a lot of Roth assets, and add to them already through backdoor transactions. I don't need to be forced to make additional contributions that I would be behooved to defer. I just wish my fellow Republicans would be completely honest with themselves, and see that this raised taxes on folks, and they could have stopped this. So it is most definitely political, but investment oriented.

My point of discussion is why? And that it sucks. And is anyone else adversely affected by it?