In September, the IRS finalized a set of remaining open items from Secure 2.0, notably the mandatory use of After Tax Roth contributions for Catch-Up contributions, if your prior years earnings exceeded $145,000 in 2025 (indexed)
Has anyone looked at implementing this in Pralana?
Initially I looked at this a a manual effort, however, it quickly seems grows more complex.
In gross terms,
If your salary is less than the indexed threshold, and your rate of salary increase is <indexed value, then you will never be impacted;
1) 401K contributions and catch-up contributions maybe allocated without restriction
If your salary is the same or more than the indexed value, and your salary increase is >index value then you always are impacted;
2) 401K contributions in an environment of your choice, but the catch-up contributions must be made as 401K Roth
Now what if you start in one zone and cross into another, either:
- as in case 1 and then increase beyond the indexed value or,
- as in case 2 and decrease below the indexed value
These two will have significant implications on future funds available.
Any ideas how best to handle?
