Timeline for Why wasn't the higher 401(k) catch-up limit for ages 60-63 increased for 2026?
Current License: CC BY-SA 4.0
9 events
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| 11 hours ago | comment | added | ShadowRanger | @littleadv: Yeah, #3 was just saying "they won't make the next higher limit normalize to a multiple of $500" (if they were planning to do that, they could move to $11,500), which is why we have to wait for the underlying calculation to hit $11,750 before we see the limit increase. | |
| 14 hours ago | comment | added | littleadv | I'm not sure I understood your #3, but the rest seems correct. The increments are in $500 chunks, so the next would be 11750. | |
| 17 hours ago | comment | added | ShadowRanger | I have to assume if $11,553.75 doesn't round up to $11,750, then their rounding algorithm is "round down", which would allow for the $X above to be up to $499.99, and for a 2.7% increase to reach $8000, $X must have been at least $289.68 (so that $7789.68 * 1.027 >= $8000). Alternatively, they won't stick to $500 increments, just $500 multiples (with $11,250 being the oddball caused by the law), and the eventual next step would be $12K, and their rounding algorithm might be round to nearest. I'd try to confirm this myself, but it's frustratingly difficult to find the equations the IRS uses. | |
| 18 hours ago | comment | added | ShadowRanger |
Hmm... So your theory is that: 1) The calculation that resulted in $7500 was really $7500 + $X, where $X was some amount small enough that the rounding algorithm they use rounds it off to $7500, but the underlying number is preserved for future year calculations and 2) $11,250 was a fixed number, not (7500 + X) * 1.5, so it lacked the $X component, and 3) Even though limits are rounded to $500, it's the increment that is rounded to $500, so the bonus catch-up limit will be n * 500 + 250 from now on, and 4) A 2.7% inflation adjustment to $11,250, $11,553.75, doesn't round up to $11,750?
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| yesterday | comment | added | keshlam | Yep. Sorry about the quibble. I'm just feeling less stable than I'd prefer. | |
| yesterday | comment | added | littleadv | Of course everything we write here assumes current law, unless we explicitly speculate otherwise. | |
| yesterday | comment | added | keshlam | Well, it will never change until and unless the law changes. Whether, when, how much and in which direction are looking a lot less predictable right now. | |
| 2 days ago | history | edited | littleadv | CC BY-SA 4.0 |
added 466 characters in body
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| 2 days ago | history | answered | littleadv | CC BY-SA 4.0 |