If the stock market or the value of your portfolio soars, tax rates may not bother you at all in the end, Conners said. If the company doesn’t offer a Roth 401(k), those high earners can’t make any catch-up contributions. You may also want to reevaluate your investments inside your 401(k).
Catch Up On New 401(k) Rules
- The IRS notes that the grace period is designed to reduce administrative burdens and give participants and employers more time to correct errors.
- ” If the answer is yes, as it is for many high-income earners, then the immediate deduction gained by contributing to a traditional 401(k) is often beneficial.
- Even though there are a lot of rules concerning how to use catch up and catch-up, we hope that all your doubts about the grammar rules have now disappeared.
- Consistency in usage between UK and US English will be discussed, and a summary will clarify when each form is appropriately employed.
- Using different word forms and phrasal verbs correctly is challenging, so it is vital that you get it right.
“Maybe this is bad, but maybe not,” Isaac Bradley, director of financial planning at HB Wealth, told USA TODAY. You need to put a hyphen for two of those functions, the noun and the adjective. During “go-go” years, people are still healthy and want to travel, celebrate and check off bucket list items, so they may take larger withdrawals, Jones said. “No-go” years may see withdrawals grow again with required minimum distributions (RMDs), higher health care costs or a “can’t take it with you” attitude, he said. How much you saved in traditional IRAs and 401(k)s, withdrawals, and Social Security can set off a “ticking tax bomb,” they said.
The usage of Catch Up remains consistent between UK and US English, emphasizing the universality of its forms. Whether in London or New York, the distinctions between the verb, adjective/noun, and informal noun forms are upheld. If they don’t, the plan would be out of compliance, and employees wouldn’t be allowed to make any catch-up contributions at all.
As Kiplinger has reported, workers ages 60 to 63 can contribute significantly more above the standard catch-up limits — up to $11,250 in 2025. The IRS notes that the grace period is designed to reduce administrative burdens and give participants and employers more time to correct errors. Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more – straight to your e-mail. For the other function, the phrasal verb, you do not need to put a hyphen, but you do need to write catch up as two words. The second way you can write catch up is without a hyphen, in which case it is a phrasal verb that means to reach someone or something ahead of you or to become updated on events or news. Those aged 60 to 63 may contribute an extra $3,750, bringing the year’s total allowable 401(k) contribution to $34,750.
New IRS rules tied to the SECURE 2.0 Act, passed a few years ago, now require certain higher earners to make those catch-up contributions exclusively on a Roth basis. That means contributions are made with after-tax dollars instead of pre-tax, but with tax-free withdrawals in retirement. The following examples show the difference between the adjective and noun word forms. For instance, in the first sentence, catch-up describes the style of call, i.e., a call to catch up on events. Since Roth 401(k) contributions are made after-tax, there’s no upfront tax deduction for the money set aside for retirement.
The Adjective/Noun Form: Catch-Up
The term catch up as two words without a hyphen is a phrasal verb that has two principal meanings. In 2026, Americans aged 50 and older earning at least $145,000 in the prior year must make their catch-up contributions to a Roth 401(k), the IRS said. The rule was part of Secure Act 2.0 to go into effect from 2024 but was delayed, giving companies time to comply.
This can be quite powerful if you are in a high tax bracket during your working years. For example, if you are in the 24% bracket, an extra $7,500 of income will cost $1,800 in tax, while someone in the 37% bracket will pay an extra $2,775. The additional income will increase your federal, state, and local taxes, so all three rates should be considered as you plan to pay more. Using different word forms and phrasal verbs correctly is challenging, so it is vital that you get it right.
Popular in Wordplay
This article embarks on a journey to explore the various forms of this term as a noun, adjective, and verb. In 2025, the annual limit for 401(k) contributions is $23,500 for anyone under the age of 50. If you are over 50, the limits are higher, allowing you to make additional contributions, called catch-up contributions. Profit and prosper with the best of Kiplinger’s advice on investing, taxes, retirement, personal finance and much more.
Keep reading the rest of the page to learn more about the grammar rules regarding catch up. We use it in this form when it is a phrasal verb and is an extension of the root verb “to catch.” We can also write “catch-up” in the hyphenated form when it is either a noun or an adjective. You’ll be building a larger bucket of money that grows tax-free and gives you more flexibility for distributions once you retire. Many taxes, deductions, and credits are based on your overall income, and income levels impact your ability to contribute to plans like Roth IRAs (not Roth 401(k)). That’s why it is important to consider all the ways higher income might affect your cash flow and taxes, not just the additional tax on the catch-up contributions. Notably, this is a per-person limit, not per household, and it is per employer.
Catchup
When using “catch up” as either a verb or noun, it would help to know how to spell it. We’ll teach you whether it’s written as one or two words or whether the hyphenated form of “catch-up” is sufficient. Adhering to grammar rules is paramount for effective communication. Misusing or misspelling words like Catch Up can lead to confusion, altering the intended meaning. Consistency in application ensures clarity and precision in both written and spoken language. Ultimately, this change has the largest impact on high-income earners, who typically receive the greatest tax benefit on catch-up contributions.
- Whether in London or New York, the distinctions between the verb, adjective/noun, and informal noun forms are upheld.
- You may still allocate the first $23,500 of contributions any way you like – traditional or Roth.
- This shows that you are more likely to come across the phrasal verb in English than any other variation.
- It has been nearly three years since the bill passed, but just this month, the IRS finally provided clarity on when and how these new rules would be implemented.
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Even though there are a lot of rules concerning how to use catch up and catch-up, we hope that all your doubts about the grammar rules have now disappeared. The hyphenated version catch-up is either a compound adjective or a compound noun. The first is with the hyphen, in which case catch-up is an adjective modifying a noun, or it is a noun. “When you pull those funds out tax-free, you’ll love it. It’ll be delayed gratification instead of instant gratification.”
If you fall into this category, take the time between now and the end of next year to understand how the new rules will affect you. The IRS final rules also clarify other questions, like how employers determine if an employee’s income exceeds the $145,000 threshold. If employers offer a Roth and traditional 401(k) in 2026, only employees who earned less than $145,000 the prior year at their current company can choose where to put their money. Those above the wage threshold must contribute their catch-up contributions to the Roth 401(k).
Is “Catch-up” Hyphenated?
The change-up may force older savers to take a fresh look at their tax situation, now and in the future, experts said. “Catch-up” is correct as a hyphenated form when we use it as a noun or adjective. In this way, we can group the two words to show that they are modifying another noun at some point in the sentence. Both dictionaries also mention the hyphenated form of “catch-up.” They write that it is agency problem correct as a noun or adjective when it is modifying another noun in the sentence. When used as an adjective or noun, the correct form is “catch-up,” with a hyphen.
Conversely, contributions to a Roth 401(k) don’t reduce your taxable income annually. Instead of a tax break up front, Roth investors get their tax break when they take money out of the plan as qualified distributions from Roths are tax-free. You get no tax deduction now, your money grows tax-free, and you pay no tax later when you take money out. This is often ideal if you are a younger worker or aren’t in a high tax bracket during your career.
So, your individual income must exceed $145,000 at one employer before you must make catch-up contributions to the Roth plan. If you earn more than $145,000, but at multiple employers, the pre-tax catch-up contributions will still be available. And since the limits are based on your prior-year income for the employer, new employees might avoid the Roth requirement on catch-up contributions in the first year. Contributions made to a traditional 401(k) reduce the amount of income reported on your current tax return. If your salary is $200,000 and you contribute $20,000 to a traditional 401(k), your taxable salary would be $180,000. If your top federal tax rate is 24% and your state’s tax rate is 4%, every dollar contributed to your 401(k) would save you $.28.
