Delayed Change to 401(k) Tax Rule Is a Reprieve for High Earners

Companies offering 401(k) retirement plans are breathing a sigh of relief after the IRS pushed back the deadline for a change that will essentially strip high earners of a tax break.

The Secure 2.0 Act, passed late last year, originally mandated that if 401(k) plans allow older workers to make “catch-up” contributions they must ensure those earning more than $145,000 use an after-tax Roth for their contributions — rather than a traditional pre-tax 401(k) — starting in 2024. But now, companies will have until 2026 before the change takes effect, allowing firms time to adjust to the Biden administration’s package of reforms.

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