Greetings!
I hope your Sunday is off to a wonderful start and the below information is useful. If you're under 50 you may want to skip this first topic, but keep scrolling for a helpful reminder below.
2026 401K Plan Changes The SECURE 2.0 Act had a lot of ambitious provisions for retirement plans to include Roth contributions for Simples, emergency funds built into 401ks, a central system to collect “lost” accounts, electronic transfers from one employer plan to another, the ability to defer to student loan payments instead of retirement plan contributions (and elect to have the match do the same) and much, much more. These are being rolled out slowly over time (with many continuously delayed as plan administrators figure out how to make them work but one goes into effect next year.
For plan retirement plan participants over 50, you have the ability to make a “catch up” deferral into your Simple IRA and 401k (but not SEP IRAs). For Simple IRAs this permitted catch up amount is $3,500 in 2025 and if you plan permits that amount changes to a “super catch up” for plan participants over 63 of $5,250.
401ks have higher limits in general (and this advisor prefers them for that reason plus many more) and this applies to the catch up as well. For 2025 those over 50 can contribute an additional $7,500 and that increases to $11,250 for participants over 63 if the plan permits it.
What’s changing? The catch up limits will increase with inflation like normal but for 401ks, all catch ups will have to be a Roth contribution not pre-tax for folks making over $145,000/year, which most of you probably do. It’s an easy way for the government to grab some more tax dollars at what’s probably a higher marginal tax rate than you’ll have at retirement?
Is this good or bad? For tax reasons noted above it’s not ideal but you should still do your catch up contributions if you can. While you are paying taxes now, that money is tax free forever which is nice to have when you are relying on your portfolio for living expenses and makes a great inheritance asset if you have high income children. If you were to save the money into a regular savings account you’d pay taxes on dividends, interest and capital gains so why not make that money tax free?
One reason I’m sending this in September is because not all plan administrators have been Roth friendly, some even charging to add a Roth capability to their plan. I’ve seen this with more archaic plan providers like American Funds/Capital Group and Hancock (if you have an old school plan provider let's talk) and it will be interesting to see how they handle this change. The easiest day to make a plan provider change is January 1st because it’s a clean break from one administrator to the next so now is the time for employers to start shopping.
Questions about any of this? Feel free to reply to this email or set up a call.
And a reminder if you haven’t checked this in a few years… A client and I were commiserating on the amount of Spam calls we receive on a daily basis and it seems like a good time to remind everyone to double check that they are on the National Do Not Call Registry. The requirement to renew every 5 years was eliminated in 2007 but I just checked mine and it expired before then (yes, I’m old).
I didn't realize this but the registry is supposed to apply to text messages as well… something I didn’t realize and will be reporting because apparently I am a good fit for work from home jobs paying $18/hour. I get multiple of these daily.
The Do Not Call list does not apply to non-profit organizations or political campaigns so you still need to brace yourself during election times. It also does not apply to business phone numbers those so unfortunately your practice is still a target.
You can check your status at donotcall.gov to make sure all your phone numbers are active.
Have a great rest of you weekend!
Natalie | 
