Alight 401Ks and 2026 "catchup" contribution changes

notintuitlobbyist
notintuitlobbyist Quicken Mac Subscription Member
in Investing (Mac)

I can't really figure out what to do with this one.
I have a 401K at Alight through my employer. This year, there was a change to force 401K "50+ catch up" contributions to a Roth account instead of traditional 401K.
I've now gotten my first paycheck of the year. The Quicken download automation shows contributions to my traditional 401K, no change. I checked the online account console, expecting that my HR hasn't made the change yet or something, but that's not the case. It shows contributions going to the same account, and there's notation that the catch up transaction is "Tax free Roth".
So it looks like this is being handled on their end as a mixed bucket, or in the alternative I guess you could think of it as sort of a sub-account. In either case the only thing I can think of to use to distinguish them is to manually tag the "Roth" one, and that still means I have one account containing two sets of funds subject to different taxation, and I don't think either Quicken or my brain is really set up for that situation.

Anyone else seen this? If so, any clever ideas? Or even bad ones?

Answers

  • John_in_NC
    John_in_NC Quicken Mac Subscription SuperUser, Mac Beta Beta

    Interesting question as this will likely come up more as Roth 401ks are increasing in popularity. I know my employer started offering that option a few years back.

    How does Alight represent this on their website? Are the funds commingled in the same account? (I suspect not-I would suspect them to break them into two accounts.) I can't see how a combination would be possible, especially if you contributed $ to the same funds with both pre/post tax handling. Figuring out what amount require RMDs (and taxation) would be a challenge.

    Also, while your employer is now tagging certain catch up contributions as being towards your Roth 401k, do the "buys" shown in your 401k at Alight show the total, or just the traditional IRA amounts?

    Let us know what you see on Alight's website versus what Quicken is downloading. And this might be something where your employer has updated the contributions, but the changes haven't occurred with Alight.

  • hurwi
    hurwi Quicken Mac Other Mac Beta Beta

    I use Fidelity and according to them, the pretax and Roth contributions and funds are comingled in the same account and tagged as pre-tax and Roth. Different companies handle this differently and in my case, since I haven't maxed out my pre-tax in the new year yet, I'm not seeing Roth contributions being made yet but will toward the end of the year when I start catch-up contributions. Would be great to be able to track these in Quicken in the same account.

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