Tag: Roth-IRA

New Roth Catch-Up Requirement for certain employees in 2026

Reading Time: 2 minutes
Received below from the HR department of the company I am working for.

New Roth Catch-Up Requirement
Starting January 1, 2026, a new rule under the SECURE 2.0 Act will impact how certain employees can make catch up contributions to the Enterprise Holdings Retirement Savings Plan.

What’s Changing?
If you’re turning age 50 or older in 2026 and your total 2025 FICA wages (Box 3 on your 2025 form W-2) are over $145,000, any catch-up contributions you make in 2026 are required to be after-tax Roth contributions.

What does this mean for you?
If your FICA wages are over $145,000 in 2025, catch-up contributions must be made as after-tax Roth contributions in 2026. This will be done automatically thru our payroll department.
If your FICA wages are $145,000 or less in 2025, this regulation will not apply to you, and no changes will be made to your catch-up contributions.

What are Catch-Up Contributions?
Catch-Up contributions are extra contributions that participants aged 50 and over can make into their retirement plan. Participants 50 and over can contribute $7,500 above the standard limit of $23,500 (for 2025), and participants aged 60 – 63 can contribute $11,250 more than the standard limit (for 2025).
Effective January 1, 2026, catch-up contributions will be automatically made as after-tax Roth contributions for employees whose FICA wages were over $145,000 in 2025.
If you do not want to make Roth catch-up contributions in 2026, you will need to change your 401k contribution rate to 0% before you reach the 2026 standard limit. The IRS has not announced the 2026 standard limit yet; however, it was $23,500 in 2025.

What are Roth Contributions?
Roth contributions are after-tax contributions, which grow tax-free and can be withdrawn tax-free in retirement, as long as five years have passed since your first Roth contribution, and you have attained the age of 59½.

Steps you can take now
• Talk to a financial or tax advisor to understand how this change may affect your retirement strategy.

References

2026 Retirement Plan Contribution Limits and Catch-Up Rules (Mercer Advisors)

November 8, 2025
Thoughts on retirement and retirement accounts

Reading Time: 3 minutes
For example, if one can earn meaningful amount of money from the 401k (paper gain) and that amount is equal or bigger than salary, and the person is over 59 and half, can he/she consider retirement? I recall there is a YT video on this – maybe this one by Azul – Research Shows This Is The Perfect Age To Retire (this is an interesting point: see if you can retire the debt including the mortgage before retirement).

Roth Conversion

Vanguard: IRA Roth conversion

Also:

Roth 401k: Roth comparison chart (IRS)

Average Joe and Jane

CBS News Money Watch article below

More Americans are living paycheck to paycheck, putting retirement out of reach, report finds

Left behind retirement accounts? (can I have some, joking)

A new 401(k) rule is coming in 2026 for millions of high-earning Americans — what to know if you’re in this group

Btw, came across this from Medium recently: The Retirement Myth: What Most Americans Really Do After They Stop Working

I loved this comment: “No such thing when it comes to retirees. I see two groups, one that does what you said (and typically dies with as much money in accounts as when they retired) and one that get healthy and stays healthy and gets busy intentionally creating and enjoying life! From what I see it’s about a 70-30 split with 70% ding very little – but the 30% are having a great time!! You have to choose which group to be in before your health choses for you. The Lie of Later: How ‘Future Time Slack’ Is Stealing Your Retirement – now I realized this article is really appliable to everyone, both active workers and retirees.”

My own video

This morning, I also talked about aging, retirement and related topics on my morning walk via YT. Or you can watch from Bilibili (link here) if you are inside China.

PS:

(YT, audio only) Charlie Munger No. 1 investment tips for those over 50

(YT, Holy Schmidt!) 6 SECRETS Retirees Should NEVER Disclose

I’m 81 and live in my RV for half the year. I didn’t save enough for retirement, so I stay afloat by ‘work camping’ and DoorDash driving. (I read it from Yahoo and it didn’t have paywall)

Americans are living longer, but many are making a costly mistake about old age (CBS News)

You can live healthy to 100, author says, Here’s the secret (Yahoo)

(YT) This 104 old’s life advice will blow your mind

(CNBC) This is the ‘biggest mistake’ you can make with your IRA, attorney says

(Update 11-14-2025 Yahoo Finance) Health & wealth check-up: How a financial adviser can help

(Update 11-18-2025 YT) How Do I Pay For Health Insurance if I Retire Early

(Update 12-31-2025 CNBC) Rule expands penalty-free early 401(k) withdrawals — but new use ‘might not be practical,’ advisor says. Let me quote some below:

If you reach your 65th birthday, you have about a 70% chance of needing some form of long-term care services and support, according to a 2020 estimate from the U.S. Department of Health & Human Services. On average, women who require care need it longer — 3.7 years, versus 2.2 years for men. While a third of 65-year-olds will never need long-term care, 20% will end up requiring it for more than five years...

For example, the cost of a home health aide reached an annual median cost of $77,792 last year, up 3% from 2023, according to the 2024 Cost of Care survey conducted by Genworth Financial. The national annual median cost of a semiprivate room in a nursing home rose to $111,325, up 7% from 2023. For a private room, the median yearly cost climbed 9% to $127,750.

(Update 02-17-2026) You need $2 million to retire and ‘almost no one is close,’ BlackRock CEO warns, a problem that Gen X will make ‘harder and nastier’

(Update 2026-09-15) 3 Must Do Moves If You Are 5-10 Years From Retirement

October 8, 2025
More on 529 plans

Reading Time: 2 minutes
About 14 or 15 years ago when my old daughter was new born, I saved some money and put it into her 529 plan. About a year later, I wrote this blog post Some questions about 529 plan.

I haven’t put in much new money into her 529 plan since the early days, and for our younger daughter I did open an account for her, but I only put in couple hundreds dollars. I know I know: but it’s not because we favorite one daughter over another. It’s mostly because the money is tight, and I think 529 plan had one downside: the money can only be used for higher education (college etc.). For me flexibility is important as I was also thinking about retirement – I mean quitting my 9 to 5 job, and potentially do something else I would enjoy more: and potentially with a smaller paycheck too.

529 plan had some change to the rules recently. This is a big one: You can now transfer some 529 amounts to a Roth IRA.

Note I am late to the Roth IRA party too. Actually I opened a Roth IRA (my first) at Robinhood App last year (after the tax day). So my one year anniversary will come up this April 🙂

College cost, along with healthcare cost and housing are top three most expensive things Americans pay in last 20+ years. If there is anything we can alleviate or do, we should.

Traditionally I am under impression as in America 18 year old is considered adult (or beginning of adulthood), American parents share some college cost with the kids, in general or on average. I have seen two extremes: parents pay all; parents pay nothing. I also saw two kinds of students too: those who work hard and do their best; those who quit and had to drop their classes or get an “F”.

There is no one size fit all for the college cost (sharing cost, or not) among all the families. For me personally, I would try my best to pay off my kids (I have two) college cost (tuition plus living cost). Anything they earn: scholarship, part time job are icing on the cake.

That’s the main motivation factor behind my investing and uber driving (or other side gigs, ideally $500 an hour consulting will work out better 🙂

FAQs

Do I have to open 529 plan in my state (the state I live in)?

No. See this Answers to Questions about 529 Plans in Different States for longer answer.

What state plan do you recommend?

Ohio 529 collegeadvantage plan. Sorry show me state 🙂 Also you may want to look at the answer to the next question.

What are the best 529 plans in 2025?

Forbes thinks those are the best.

What if my kid is already in high school?

Better late than never in terms of saving. However, you do need to think about the investment options, your tolerance for risk and market volatility, etc. I know for my better half (my wife), she is pretty much risk averse, and hates volatility. So in those cases, you may consider the bond investment options vs. stock mutual fund.

January 11, 2025
401K, IRA, Roth IRA

Reading Time: < 1 minuteHow to deal with 401k when leaving a job?
Some options:
1) Take it out, with 10% penalty, and potential income tax later on. This is usually not recommended.

2) Rollover to an Rollover IRA; or Rollover to the new employer’s 401k.
I did this once: not because of change of job, but because of change of company ownership, I have opportunity to rollover some of the 401k money into Vanguard Rollover IRA in year 2007. That money didn’t recover to the initial value so far.

3) Leave it alone (until 59 1/2 years old).
I did this when I left my former employer in Oct. 2008 (the middle of financial crisis), it turns out to be a good move (or no-op), as the value recovered from the crisis.

Should I open a traditional IRA or Roth IRA?
Tax deduction: IRS publication here.

(more…)

February 20, 2010