Confusion about retirement fund minimum distributions can lead to costly mistakes. Minimum distributions are not required at age 59.5, but rather at age 73 or later, depending on the birth year. If still working, RMDs can be postponed for retirement plans sponsored by the current employer, but they are still required for other retirement accounts. Roth accounts are exempt from RMDs. It is advisable to consult a tax professional to navigate the complexities of tax law and avoid costly missteps.
Millions of Americans, particularly higher earners, are set to lose a popular 401(k) benefit due to changes brought about by the SECURE 2.0 Act. Starting in 2026, catch-up contributions for older, higher earners will have to be designated as after-tax Roth contributions instead of regular 401(k) ones. This change has significant tax implications and removes the upfront tax break offered by traditional 401(k)s for catch-up funds. While it may reduce tax savings for high earners in the short term, the shift to Roth accounts offers tax-free growth and withdrawals in retirement. However, it also means that affected individuals will see a decrease in their take-home pay as their contributions to Roth accounts will be deducted from their paychecks.
