The American tax code is undergoing significant changes from various pieces of legislation. A small change in the SECURE Act 2.0 could impact a select group of investors and savers, altering how seniors can make catch-up contributions to their retirement accounts.

Signed into law by President Biden, the SECURE Act 2.0 aims to boost retirement savings with major changes to various retirement plans. Notably, seniors aged 60-63 can make a “super catch-up” contribution of $11,250 to their 401(k) starting in 2025.

However, the law introduces income-based restrictions on catch-up contributions. Seniors over 50 earning over $145,000 must contribute to a Roth 401(k), potentially leading to higher upfront tax bills.

These changes could impact millions of Americans, particularly high-income seniors. It’s essential to act quickly to minimize potential tax liabilities as a result of these new rules.

If you qualify for catch-up contributions, estimate your income for next year and check if your employer offers a Roth 401(k) plan. Seek advice from a tax advisor or financial planner to adjust your savings and investment plans accordingly.

While the changes may increase tax liabilities upfront, withdrawals from a Roth 401(k) are tax-free under certain conditions, offering potential tax benefits in the future. Adjust your retirement plan accordingly to reflect these new rules.

Read more at Yahoo Finance: This quiet but crucial 401(k) change is coming in 2026, impacting how millions save for retirement. Don’t get hurt