There's another way? 
Posted on 07/17/2023 12:51:20 PM PDT by DFG
This change affects Roth 401k not ROTH IRA.
You know how they are going to do that, right? they have been proposing this and getting it voted down every year, but its going to pass one year. You want the benefits of an IRA?
you need to have a portion of it invested in these specific government backed securities. This just gives the government your money.
New rules! Fewer escapes from the grasp of the tax man.... Fork it over! Don't make me hurt you....
There is a lot of money in 401ks that is going to be used to fund medicare
I’ve not had an IRA in 46 years...
The other main difference is that while the Roth is taxed up front - it can be taxed on the back end if Congress decides to do that.
That's why I have no Roths.
“This change affects Roth 401k not ROTH IRA.”
It effects both. Diverts excess to Roth IRA.
“I see you have some money there. Give it to me.”
There's another way?
That's not all. It has been a common practice in the last 20 years to place a family home in a trust to avoid inheritance taxes. No more. The government wants to tax than "unrealized gain". More often than not, the home has to be be sold to "realize the gain and pay the taxes".
Not getting the stepped up value is BEYOND VILE. It must be rescinded by some future Congress.
Don’t let them kid you, they (the DC Demoncrats) want every penny…and they will try and get it.
>> But from 2024, those earning over $145,000 will no longer be able to put these catch-up payments into a traditional 401(K).
Depending on numerous factors, $145k is not serious money. I’m guessing this is Single, and not Joint.
Roth is probably a better place for the money.
Roth is good only for those who can not take tax deduction in current year due to current high income.
Why? With regular IRA you get immediate tax reduction. Roth can become taxable at congress’s discretion. They can change any law at any time. Roth is not in the constitution.
One last point is that Congress mistakenly deleted a part of the tax code when drafting SECURE 2.0. The result is that the way the code now reads is that no employees (high-paid or not) will be able to make any catch-up contributions (pre-tax or Roth) starting in 2024. Hopefully, either Congress will fix this mistake or the IRS will turn a blind eye to it.
You bet they will do the same with Roth IRAs. They will find a way to tax that on the back end as well.
I read _traditional_ 401k, not Roth 401k. A Roth 401k isn’t offered to me by an employer. My Roth IRA has salary limits for contributions, I’m above them (yeah...not a horrible problem), so can no longer contribute to it. I’m over 50, so I’m unsure where I’ll put some ‘catch up’ dollars. Maybe a Traditional IRA.
I wasn’t aware of this change coming.
There are two kinds of funds in a retirement account, contributions and earnings.
Contributions are taxed at one end or the other, at your current rate for Roth, or at your rate at retirement with traditional. The expectation is that your rate will be lower in retirement, though that assumes government doesn’t jack up the rates.
Earnings are taxed at retirement rates, if earned from traditional, or not at all for Roth.
So, the longer you have for earnings to compound, the greater the advantage for the Roth.
If you’re close to retirement, Roth makes no sense. Which is of course why it’s the choice that is still available.
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