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Erick Murray
If you’re contributing to a 401K or an employer sponsored plan, 2026 brings several new important updates that you should be aware of. Specifically, when it comes to contribution limits, roth versus pre tax decisions, and new catch up contribution rules. We’ll walk through what exactly has changed, why it matters, and how to make sure your 401K still fits into your overall financial plan.
So to begin, let’s start with what the new contribution limits are for 2026. For most employees, the standard 401K contribution limit is $24,500. If you’re 50 or older, you’re also eligible to make an additional catch up contribution of $8,000. But if you are between the ages of 60 and 63, you’re also allowed to make a super catchup contribution of an additional $3,250.
While these higher limits create more opportunity to save, just because you can contribute more does not automatically mean that you should, at least not without a coordinated plan. Another important factor, outside of what the contribution limits have increased to, is whether or not you’re making contributions in your 401K on a pretax or roth basis. Pretax contributions lower your taxable income today, but you will pay ordinary income taxes when those funds are withdrawn in retirement.
Roth contributions, on the other hand, are taxed today, but withdrawals in retirement can be completely tax free. Choosing between the two really just depends on your current income and tax bracket, where you expect taxes to be in the future, and what other assets you have outside of your 401K. Many people default to one option and never revisit that decision as their income changes.
However, with the new contribution limits and evolving tax rules, making sure you’re contributing in the right way has become an increasingly important part of long term planning. Another impactful change under the Secure Act 2.0 really affects high income earners, who made catch up contributions. If you earned more than $150,000 in the previous year, any catch up contributions you make, whether it’s the standard $8,000 or the new super catch up, must now be made on a Roth basis rather than pretax.
This means you no longer receive an upfront tax deduction on those catch up dollars, but those contributions can potentially grow and be withdrawn tax free in retirement. These changes often surprised individuals who have relied on catchup contributions to reduce their income later in their careers. And again, without proper planning, this shift can impact your annual tax bill, it can reduce your take home pay, and the overall tax treatment of your retirement assets.
Really, why exactly do these changes matter to your financial picture? Again, to reiterate, these changes really do matter because the decisions that you make inside your 401K directly impact how much you pay in taxes today, how much income you can create in retirement, and how efficiently your money grows over time. All these factors that we discussed influence whether your savings are truly working for you or creating unnecessary implications down the road.
Without a clear strategy, it’s easy to contribute the wrong way or miss opportunities, especially for high income earners who assume that their 401K is already optimized. When your employer sponsored plan is lined with the rest of your financial picture, your savings, one become more efficient, and two retirement becomes a bit more predictable. To wrap things up, if you’re currently contributing to a 401K, 403B, or 457, now is a better time than ever to review your current strategy.
The 2026 updates have created both new opportunities and new complexities, and making the right decisions today can have a meaningful impact down the road. We’ve helped our clients understand how their 401K fits into their broader financial picture by accounting for these new changes and aligning our strategy with their goals in mind. If you want clarity, confidence, in a plan that’s built intentionally, we encourage you to give us a call or to share this video with someone that might find this information helpful.