IRS 401k bombshell, now what?

[Anonymous]

Is my understanding correct? My DH turns 50 in June next year, he is a high earner. So he can contribute in

2026
Trad 401K: 31K (23.5K+7.5K)
MegaBackdoor Roth+Employer match : 39K which is 70K minus (23.5+7.5K)


2027
Trad 401K: 23.5K
Roth 401K: 7.5K
MegaBackdoor Roth+Employer match : 39K which is 70K minus (23.5+7.5K)

So in 2027, essentially he would contribute like he did when he was 49, given he has been maximizing his backdoor roth ira for a few years

[Anonymous]

Anonymous wrote:Invest in bitcoin.

This. I wouldn't open a 401k for deduction, the match, or much anything else. If you only knew what you are giving up by using that account.

[Anonymous]

This is a good change, especially to provide some tax risk diversification.

[Anonymous]

Anonymous wrote:Sounds like a revenue raiser to me. Make people pay tax at the highest rates of their peak earning years.

They should shut down Roths though. Terrible tax policy. But those are generally most beneficial for those who save in them when young, when their marginal rates are lower.

Few people have marginal rates higher in retirement than their peak earning years. I doubt this is beneficial to most.

Aren't you prohibited from contributing to Roths once your taxable income crosses over 200,000 or something?

Or is it different for each spouse?

Like spouse 1 makes 250,000 can't contribute, but spouse 2 makes 70,000 so they can still contribute?

[Anonymous]

Bombshell is quite dramatic. It’s been well publicized and delayed, so not really a surprise. Basically it’s just a change in the tax code

[Anonymous]

Anonymous wrote:

Anonymous wrote:Sounds like a revenue raiser to me. Make people pay tax at the highest rates of their peak earning years.

They should shut down Roths though. Terrible tax policy. But those are generally most beneficial for those who save in them when young, when their marginal rates are lower.

Few people have marginal rates higher in retirement than their peak earning years. I doubt this is beneficial to most.

Aren't you prohibited from contributing to Roths once your taxable income crosses over 200,000 or something?

Or is it different for each spouse?

Like spouse 1 makes 250,000 can't contribute, but spouse 2 makes 70,000 so they can still contribute?

No income limit for back door Roth

[Anonymous]

Anonymous wrote:Bombshell is quite dramatic. It’s been well publicized and delayed, so not really a surprise. Basically it’s just a change in the tax code

+1. OP should stay informed.

[Anonymous]

Roth is just a wealth transfer tool for high income/high net worth families. Most people maximizing Roth have no plans to use the Roth money in their lifetime.

[Anonymous]

I wish I had been putting more in Roth so I’m not upset that all catchup needs to go in there. I hadn’t appreciated how much our Fed pensions would keep us with sufficient guaranteed taxable income so that we’ll never be in a very low tax bracket, so moving more into funds that won’t be taxed works for us.

[Anonymous]

my employer has a mega roth and our regular 401k. i contribute the max to both (the Roth max is currently 30k) can i then also contribute the 7500 ‘catch up’ via roth 401k as well? I’ll be 50 in 2028 and it would be quite nice to be putting now 37k/yr into my roth. Been doing this for years and it’s quite a nice nest egg i’ve grown that won’t be taxed when i cash out.

[Anonymous]

Anonymous wrote:Roth is just a wealth transfer tool for high income/high net worth families. Most people maximizing Roth have no plans to use the Roth money in their lifetime.

haven’t the rules. hanged on that?

[Anonymous]

Anonymous wrote:It keeps getting delayed. They just announced that it will begin at the very end of 2026 rather than the beginning. So one more year to contribute everything to traditional.

It’s effective jan 1, 2026. The mention of 12/31/2026 is to say they will except a best attempt at doing it for the first year, it does not provide an additional delay

[Anonymous]

Anonymous wrote:

Anonymous wrote:Sounds like a revenue raiser to me. Make people pay tax at the highest rates of their peak earning years.

They should shut down Roths though. Terrible tax policy. But those are generally most beneficial for those who save in them when young, when their marginal rates are lower.

Few people have marginal rates higher in retirement than their peak earning years. I doubt this is beneficial to most.

Aren't you prohibited from contributing to Roths once your taxable income crosses over 200,000 or something?

Or is it different for each spouse?

Like spouse 1 makes 250,000 can't contribute, but spouse 2 makes 70,000 so they can still contribute?

That’s an ira, there are no income limits on roth in a 401k

[Anonymous]

Anonymous wrote:It keeps getting delayed. They just announced that it will begin at the very end of 2026 rather than the beginning. So one more year to contribute everything to traditional.

Cite please. I just turned 60, ugh.

[Anonymous]

Anonymous wrote:So I’m I over 50 and have been doing makeup contributions but now that’s not going to happen anymore and I need to
Put that money in ROTH? Can someone explain this more?

The catchup contribution will now only be allowed into the Roth 401K portion of your retirement plan. If your company does not offer a Roth 401K, you cannot contribute a catchup. Not a big deal.

I get the loss of a tax shield on <$10K, but an account that allows post-tax dollars to grow tax-free forever is great! Everyone should still do it.