A recent change in the law regarding catch-up contributions for age 50+ higher income workers will take effect beginning in January 2024. As the law is written, an individual making more than $145,000 will no longer be eligible for a catch-up contribution to a tax-deferred 401(k). But that high-income worker can make a taxable catch-up contribution to a Roth 401(k), if the employer has a Roth feature… some employers do not. CNBC article
This change still makes sense for most workers: contribute the catch-up amount to a Roth 401(k). The 2023 catch-up amount is $7500, and the 2024 amount will likely be more. But those higher income workers will now pay the US and state income tax on that $7500+.
Some financial firms have asked for a deferral on the January 1 deadline to allow more time to introduce Roth options and change software verifying employee eligibility regarding income. Stay tuned… this could mean employees need to make changes to contributions for 2024.