A Benefit of Being 50 or Older

Column distributed by Hearst Connecticut Media Group.

Links to resources referenced:

• Congress.gov: H.R.1836 - Economic Growth and Tax Relief Reconciliation Act of 2001
  • https://www.congress.gov/bill/107th-congress/house-bill/1836/text
    • Related column excerpt:
      • “Created by the Economic Growth and Tax Relief Reconciliation Act of 2001, catch-ups help future retirees with enhanced opportunities to save on a tax-advantaged basis.”  
• Vanguard: How America Saves 2025
  • https://workplace.vanguard.com/insights-and-research/report/how-america-saves-2025.html   
    • Related column excerpt:
      • “Vanguard’s ‘How America Saves 2025’ report, which uses data from more than 1,400 qualified plans and nearly 5 million participants, offers some insight. About one-half (51%) of those with incomes over $150,000 took advantage of catch-ups (if offered) in 2024, but only 16% of eligible participants of any income level did so.”
• Employee Benefit Research Institute: PRRL Fast Fact
  • https://www.ebri.org/content/secure-2.0-act--how-many-participants-and-plans-will-be-impacted-by-the-new-catch-up-contribution-rules-for-high-earners
    • Related column excerpt:
      • “Utilizing data from the 2023 PRRL Database 2, which included more than 900,000 participants representing 208 different plans, the percentage of participants eligible to make catch-up contributions was 36%, and of those, 5% chose to participate. Of those who did make catch-up contributions, 24% earned more than $150,000.”
• Principal Financial Group: “7 secrets to help you save 15% and become a retirement super saver”
  • https://www.principal.com/individuals/build-your-knowledge/secrets-to-help-become-retirement-super-saver#:~:text=Super%20savers%20are%20generally%20thought,to%20get%20an%20employer%20match.
    • Related column excerpt:
      • “The reality is that for some with lower incomes, catch-ups are simply unaffordable. For others with higher incomes and insufficient savings, catch-ups can be lifesavers. Certainly, ‘super savers’ will benefit (described by the Principal Financial Group as those who save 15% or more of their income for retirement, or at least 90% of the maximum allowed).”
• Fidelity Viewpoints: “Understanding new Roth 401(k) catch-up rules”
  • https://www.fidelity.com/learning-center/personal-finance/401k-catch-up-contributions-high-earners  
    • Related column excerpt:  
      • “Before leaving the subject, there is another type of catch-up that is geared to employees who make $150,000 or more. Starting this year, for those who exceed FICA-taxable earnings of $150,000 in 2025, the catch-up will be recorded in after-tax dollars instead of pre-tax. That means that the catch-up will count as part of your W-2 income. To find out more about this 2026 change, read Fidelity’s ‘Understanding new Roth 401(k) catch-up rules.’”