Senate considering eliminating pretax 401k catch-up contribution
Workers over age 50 would no longer be able to make catch-up contributions on a pretax basis to their retirement plans under a new amendment to the GOP's Senate version of the tax bill.
[URL]https://www.cnbc.com/2017/11/13/senate-tax-tweak-would-curb-pretax-401k-catch-up-.html[/URL]
Re: Senate considering eliminating pretax 401k catch-up contribution
Quote:
Originally Posted by
StockSurfer
Workers over age 50 would no longer be able to make catch-up contributions on a pretax basis to their retirement plans under a new amendment to the GOP's Senate version of the tax bill.
[URL]https://www.cnbc.com/2017/11/13/senate-tax-tweak-would-curb-pretax-401k-catch-up-.html[/URL]
Hatch Amendment #2 to Chairman’s mark of “Tax Cuts and Jobs Act.”
Short Title: An amendment to the catch up contribution rules for section 401(k), 403(b) and 457)(b) retirement savings plans.
Description of Amendment: This amendment would require all catch up contributions to section 401(k), 403(b) and 457(b) retirement savings plans to be Roth only, and increase the $6,000 catch up contribution annual limit applicable to such plans to $9,000.
Offset: This amendment is expected to raise revenue in the 10-year budget window.
Re: Senate considering eliminating pretax 401k catch-up contribution
Definitely a tax increase on those trying to max out both catchup and Roth, just when they can at last try to make up for all the years they couldn't save enough and yet it's still a challenge. hmm. something wrong with that picture.
Re: Senate considering eliminating pretax 401k catch-up contribution
Quote:
Originally Posted by
alevin
Definitely a tax increase on those trying to max out both catchup and Roth, just when they can at last try to make up for all the years they couldn't save enough and yet it's still a challenge. hmm. something wrong with that picture.
Maybe this will keep workers in the work force longer instead of retiring in their early to mid 60s. I'm not trying to be political but this is one way to ensure Social Security etc remains and they don't have to reap the backlash of changing the age you can start collecting or contribution percentage. Plus it gives them the ability to kick debt down the road further since workers will be working longer. Its a win for them and a loss for us.
Re: Senate considering eliminating pretax 401k catch-up contribution
Quote:
Originally Posted by
StockSurfer
Cactus posted this link https://www.fedsmith.com/2017/11/13/...contributions/ :eek: --would require Roth for Catch Up but looks like amount would increase $9K per Hatch amendment. Eliminating conversions would throw a wrench in my plans but as article states: "Both the House and Senate have introduced their own tax reform bills, and more changes are likely to take place to both as they work their way through the legislative process."
Re: Senate considering eliminating pretax 401k catch-up contribution
Quote:
Originally Posted by
evilanne
Cactus posted this link https://www.fedsmith.com/2017/11/13/...contributions/ :eek: --would require Roth for Catch Up but looks like amount would increase $9K per Hatch amendment. Eliminating conversions would throw a wrench in my plans but as article states: "Both the House and Senate have introduced their own tax reform bills, and more changes are likely to take place to both as they work their way through the legislative process."
Messes up my retirement strategy as well... Instead of making maximum contributions during my preretirement years, having it grow in the market, and then withdrawing after retirement when my income is lower and I’m in a lower tax bracket, would have to pay maximum taxes on it now when i’m at the higher tax bracket. I contacted my reps about this proposal, it would take away an important mechanism to save for retirement ...
Re: Senate considering eliminating pretax 401k catch-up contribution
Re: Senate considering eliminating pretax 401k catch-up contribution
Another little tidbit from that same link that I missed previously. Be careful about when/if you do a roth conversion from trad ira to Roth in your outside accounts. the senate bill would disallow recharacterization, ie ability to change your mind and undo the conversion, put those funds back into trad ira. there was always a time limit on changing your mind, but now would not be allowed at all if this stays as part of the final legislation.
Re: Senate considering eliminating pretax 401k catch-up contribution
Quote:
Originally Posted by
StockSurfer
Hatch Amendment #2 to Chairman’s mark of “Tax Cuts and Jobs Act.”
Short Title: An amendment to the catch up contribution rules for section 401(k), 403(b) and 457)(b) retirement savings plans.
Description of Amendment: This amendment would require all catch up contributions to section 401(k), 403(b) and 457(b) retirement savings plans to be Roth only, and increase the $6,000 catch up contribution annual limit applicable to such plans to $9,000.
Offset: This amendment is expected to raise revenue in the 10-year budget window.
Sucks!
When this is done, my taxes go up. How about you?
Sent from my iPhone using TSP Talk Forums
Re: Senate considering eliminating pretax 401k catch-up contribution
So, Roth only on catch-up contributions only. And the ceiling is increased. I would love a choice if it were me, but not the end of the world. It’s still your post tax money, and it’s earning compound interest.
This tax plan isn’t the first to use creative accounting to reach the target. Both sides have been guilty of that.
Weve got bigger problems in this country.
Re: Senate considering eliminating pretax 401k catch-up contribution
Quote:
Originally Posted by
RazorCat
So, Roth only on catch-up contributions only. And the ceiling is increased. I would love a choice if it were me, but not the end of the world. It’s still your post tax money, and it’s earning compound interest.
This tax plan isn’t the first to use creative accounting to reach the target. Both sides have been guilty of that.
Weve got bigger problems in this country.
Would love to know how many TSP'rs are currently utilizing the catch-up contribution provision?
Re: Senate considering eliminating pretax 401k catch-up contribution
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Originally Posted by
Scout333
Would love to know how many TSP'rs are currently utilizing the catch-up contribution provision?
I attended a number of retirement seminars when I was employed. The number of employees that acknowledged they were contributing the maximum to TSP, and making catch-up contributions was minimal. I would think most employees struggle just to max out TSP contributions. They’re aren’t any statistics (that I found) on the percentage of Feds that make catch-up contributions.