Core Points - The SECURE 2.0 Act introduces a significant change for older workers earning above $145,000, requiring them to make catch-up contributions on a Roth (after-tax) basis starting in 2026, while others can still opt for pre-tax contributions [1][2][4] - This legislative change aims to increase federal revenue in the short term while allowing high earners to build tax-free retirement savings over time, reflecting a bipartisan effort to enhance retirement benefits [2][3] Summary by Sections Legislative Background - The change is part of Section 603 of the SECURE 2.0 Act of 2022, which mandates that catch-up contributions for those aged 50 and older who exceed the income threshold be designated as Roth contributions [2] - The legislation was influenced by concerns over tax-free accounts held by high earners, notably highlighted by investigations into Peter Thiel's substantial tax-free retirement account [2] Income Threshold and Regulations - The earnings threshold is set at $145,000 of prior-year FICA wages, indexed for inflation, and the Treasury and IRS are tasked with issuing regulations to implement this change across various retirement plans [3] - Compliance with the Roth catch-up requirement will begin with the 2026 tax year, although plan sponsors may adopt earlier interpretations during a transition period [4] Contribution Limits - For 2025, the employee deferral limit is $23,500, with a standard catch-up contribution of $7,500 for those aged 50 and older, and a new "super" catch-up of $11,250 for ages 60-63 [4] - These contribution limits are crucial for retirement planning for near-retirees starting in 2025 and beyond [4]

Core Insights - The importance of having an emergency fund is emphasized due to unexpected expenses that can arise in life [1][2] - A significant portion of Americans rely on credit cards for emergency expenses, which can lead to long-term financial pressure [2][3] - Many Americans lack emergency savings, with a notable percentage unable to afford expenses over $400 [3] Emergency Savings Accounts - A Pension-Linked Emergency Savings Account (PLESA) is a potential solution for Americans struggling to save for emergencies, with a high interest in such accounts among workers [4] - The PLESA was introduced as part of the SECURE 2.0 Act of 2022, allowing employers to sponsor emergency savings accounts for employees [5] - Automatic enrollment in a PLESA can facilitate savings, with contributions typically set at 3% or less of an employee's paycheck, while allowing for manual adjustments [6] - PLESAs have a maximum limit of $2,500, though employers may set lower limits, pausing contributions once the threshold is reached [7]