Any legislation that is supposed to benefit taxpayers, there is a hidden cost. Look at the Tax Reform Act of 1986, temporary reductions in marginal traded for deductions that were lost for good such as personal interest, most IRA contributions, and passive activity losses. Remember that unlimited state and local tax deductions that we gave up a few years ago?

For SECURE 2.0, there are increased catch-up contributions, RMD extensions, and a treasure trove of some nice participant benefits. Hidden behind everything is this little thing any catch-up contributions by highly compensated employees will be Roth contributions only. Big deal? Ask my wife, who doesn’t think she is highly compensated living in New York and making north of the HCE limit. Roth is a great feature for the handful of people that could actually afford to pay the taxes upfront. I’m not sure people who are eligible for catch-up may continue if they’re forced to pay the taxes upfront on these contributions because they make more than the HCE limit.