Age 50 catch up rule change

You’re probably over the income threshold ($145K). The SECURE ACT 2.0 says catch up contributions must be Roth only. It’s designed so the government gets its money now instead of later.

At 50 plus, you need to make sure all your wealth is not tied up in pre-tax accounts. I’m 53 and I’ve been contributing to a Roth 401k for at least the last three years.

51yr old here with a 46yr old wife, we’ve both religiously maxed out our 401k’s for about 10-15yrs with the last few yrs going to the newly added option of a Roth 401k. I feel like we’ve over done it in that traditional bucket. What I wish I would’ve known sooner was at some point, we should’ve decreased our 401k contributions and put more into brokerage, which is what we’re doing now.

Not having more post-tax assets is a huge regret.

quote:

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What I wish I would’ve known sooner was at some point, we should’ve decreased our 401k contributions and put more into brokerage, which is what we’re doing now.

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So your contributions were not matched?
|Damn! Someone should have gone over that with you.

When the RMDs kick in, you won't have any control over your tax bracket. If you continue to fund pre-tax, you'll not be able to take advantage of the catch-up contribution for starters. Secondly, if you continue to fund pre-tax, you'll also be hit when RMDs kick in. At least in my account, we're showing that if the market returns are normal, I could be hit with RMDs in excess of $500-$600k/year. Be aware and either fund a Roth 401k or a brokerage but continue down the pre-tax path if a precarious scenario.

Roth conversions could make sense depending on age and other income