401k tax rules have changed if you are over 50 and making $150k

Back in today's Dollars and Cents, your financial plan should adjust as your life changes. Joining us this morning is local financial advisor Jason Matthews, who says you should also shift as the tax rolls change. Correct. Which we see this a lot. Okay, so you Talk about changes you see particularly in people over the age of 50. What are you seeing in terms of tax changes? Yeah, so one big thing that got established last year that's now in force, if you're 50, a high-income earner who made over $150,000 last year in 2025 with the same employer, you have your catch-up provision, but there's a new rule towards it. Any amount that you put in your catch-up provision has to go inside of your Roth, not in your traditional 401k plan inside of your... employer plan, which is huge. What do you mean by the catch up? You mean the extra money that you can put in and over and above what's. Uh, allowed by your company. So what it is, is if you're for the normal person, you could put $23,500 away, but if you're over the age of 50, you could put additional $7,500. And if you're over the age of 60, you could put away $11,250 more than the average young person can to form a K plan. That portion has to go into a Roth now on. OK, so no longer just into your company's 401k, whatever is established. Is your company Roth 401k plan? So they have to offer a Roth inside their employer plan for you. OK, so you'd have to ask about that at this point in our lives. Well, you know, when you're in your 50s, typically people are able to save more for retirement. You're making more money, hopefully, ideally, right? Your salary is up, but you're also saving for or paying for college. Correct. So what do you recommend in terms of that balance? Because just about the time, oh, I can maybe put a little bit more away. I have a big expense over here. I would say is when you go to the bank, right, we see the mortgage person. We see the student loan person. But when we go to the bank, we don't have a retirement loan person. So first and foremost, we have to take care of our retirement, which means worst case scenario, you should always see your company match. If you're going to pay for your kids, uh, college, but you still want to make your top priority, your retirement plan, because your life expectancy for you can be 90, 94 years old. So if you're age of 65 and you make it there, there's a 74% chance that you or your spouse are going to live past the age of 90. So we have to make sure we have enough money to have for all those years, which is very tough. And some of those years get very expensive as we age. We've seen with aging What if that means... If that means taking out loans for college, do you recommend that? If you look at your full plan, and you can afford to do that when you look at your full retirement plan, and you're not sacrificing your retirement for it, that can be a smart move. But you have to make sure you go into your plan. Just don't do it off of emotions. See, how will this impact me in the long term, not just over the next four or five years as my kids go to college? So it's so better if you can... Meet your retirement plan, even if that means maybe a cheaper college or a loan for college. Correct. And that might be an alternative. Maybe your kids have to do work study, have to work a little bit, bus tables, right? Or maybe that's how we used to do it. I certainly did. Exactly, right? Or they get you right. But sometimes they might, or your child has to take a student loan, right? So we have to look at that thing because we cannot sacrifice for our retirement. Because like I said, we're going to live longer. Oftentimes we might have to even I even retire when we want to. Not all of us can retire like Tom. Tom Brady after we went to Super Bowl. Some of us have to retire earlier because we might get laid off and everything else that goes along with it. Right. And again, it's good for kids to work. Correct. For what they have, just like we do. And they'll appreciate it so much more. That's true. They might complain, but they'll appreciate it. Exactly. Jason Matthews, thank you so much for the advice, the information. We'll be right back with the opening bell.