Big changes are coming to retirement savings in 2026. The IRS recently updated the rules for 401(k) catch-up contributions under the SECURE 2.0 Act. Here’s some information to help you understand what this means for your retirement strategy so you can plan ahead.
New Contribution Limits for 2026
First, let us look at the new standard limits. For 2026, you can contribute up to $24,500 to your 401(k) plan.
If you are 50 or older, you can also make “catch-up” contributions to boost your savings:
- Standard Catch-Up: If you are over 50, you can contribute an extra $8,000.
- Special Catch-Up: If you are between ages 60 and 63 during 2026, you qualify for a higher catch-up limit of $11,250.
The New Roth Requirement for High Earners
Here is the most critical update you need to know.
If your wages subject to Medicare tax exceeded $150,000 in 2025, the IRS changed how you must make your catch-up contributions. You can no longer put this extra money into a traditional, pre-tax 401(k). Instead, you must deposit your catch-up contributions into a Roth 401(k) account.
Because Roth accounts use post-tax funds, these specific contributions will not reduce your taxable income for the year. You will also need to ensure a separate Roth 401(k) account exists within your employer’s plan to hold these funds.
Note: If your 2025 wages were under the $150,000 threshold, this new rule does not apply to you. You can continue making pre-tax catch-up contributions as usual.
Your Next Steps
Employers handle these updates differently, so we highly recommend reaching out to your company’s HR department or payroll provider now. Ask them the following questions to ensure your deferrals are correct for 2026:
- Is the payroll system set up to automatically route my catch-up contributions to a Roth 401(k)?
- Do I need to take any specific steps to open the Roth 401(k) account within our plan?
Navigating tax law changes can feel overwhelming, but you do not have to do it alone. If you want to discuss how these new rules impact your specific tax strategy, please reach out to your Saville team member for more information.