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Liz Weston: Saving for retirement just got more complicated

Secure 2.0 gave people several new options for workplace retirement accounts, but it forces higher-income savers to use their plans’ Roth option for catch-up contributions

By LIZ WESTON of NerdWallet
Published - Jul 10, 2023, 07:03 AM ET
Last Updated - Jul 10, 2023, 10:24 AM EDT

The Secure Act 2.0 legislation that passed late last year added new retirement savings options but also has a few potential catches for unsuspecting savers. Understanding these possible pitfalls may help you make better decisions, or at least be prepared for what’s to come.

In my last column, I covered one set of these changes: new exceptions to the 10% federal penalty for tapping retirement money early. For this column, I’ll cover what you need to know about Secure 2.0’s changes to catch-up contributions and company matches for workplace plans.

A POTENTIALLY PROBLEMATIC CATCH-UP PROVISION

Catch-up provisions have long allowed older workers to put more money into retirement plans. In 2023, for example, people 50 and older can contribute an additional $7,500 to 401(k)s and 403(b)s, on top of the standard $22,500 deferral limit for all employees in those plans.

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