2026 401(k) Contribution Limits and Roth Catch-Up Changes

The IRS has announced the new 401(k) contribution limits for 2026, giving retirement savers the opportunity to set aside more for the future. Alongside these higher limits, a new provision under the SECURE Act 2.0 will take effect, changing how some catch-up contributions are handled for higher earners.

These updates are designed to encourage greater retirement savings and expand the use of Roth accounts. Whether you’re an employee maximizing contributions or an employer helping your team prepare for the change, it’s important to understand how the new rules will affect you.

2026 Contribution Limits

Here’s what’s new for 2026:

• 401(k) employee deferral limit: increases to $24,500 (up from $23,500 in 2025).
• Catch-up contribution (age 50+): increases to $8,000 (up from $7,500 in 2025).
• “Super” catch-up contribution (ages 60–63): remains at $11,250.

These limits apply to both pre-tax and Roth 401(k) contributions. The increase in the base deferral limit gives savers an additional $1,000 to set aside each year, which can make a meaningful difference over time, especially when combined with employer matching contributions and potential investment growth.

If you’re aged 50 or older, the $8,000 catch-up contribution allows you to go beyond the standard limit for a total of $32,500. For individuals ages 60 to 63, the “super” catch-up, introduced under the SECURE Act 2.0, offers an even greater opportunity to accelerate savings in the final years before retirement with a total $35,750.

These contribution opportunities can help workers close the retirement gap, especially as inflation and longer life expectancy continue to shape financial planning goals.

SECURE Act 2.0: The New Roth Catch-Up Rule

Beginning January 1, 2026, the SECURE Act 2.0 introduces a significant change to how some participants make catch-up contributions.

Here’s how it works:

• If you’re aged 50 or older and earned more than $150,000 in wages (as defined by FICA) from your employer in 2025, any catch-up contributions must be made on a Roth (after-tax) basis for 2026.
• If you earn less than $150,000, you can still decide whether to make catch-up contributions pre-tax or Roth.
• Those who don’t receive FICA wages from an employer aren’t impacted by this new rule. If you’re unsure how this applies to you, it’s a good idea to check with your CPA or tax advisor.

This change was originally scheduled to begin in 2024 but was delayed until 2026 to give plan sponsors, payroll providers, and recordkeepers additional time to update systems.

What These Changes Mean for You

For most savers, the higher 401(k) limit is good news; it means more opportunity to invest for the future and take advantage of tax-deferred or tax-free growth.

For higher earners, the new Roth catch-up rule means paying taxes on catch-up contributions in the year they’re made, but it also unlocks the potential for tax-free growth and withdrawals in retirement. Roth contributions can be especially valuable for those who expect to be in a similar or higher tax bracket later in life.

This shift also highlights the growing importance of tax diversification. Having both pre-tax and Roth savings in your 401(k) provides flexibility when managing taxable income in retirement, allowing you to control when and how you pay taxes on your withdrawals.

What You Can Do Now

Now is a great time to plan for 2026. Here are a few simple steps to take:

1. Review your 401(k) contribution settings to ensure you’re taking full advantage of the new $24,500 limit.
2. Consider your tax strategy and whether Roth contributions could make sense for your long-term goals, especially if you expect your income or tax rates to rise.
3. Plan for the Roth catch-up rule if your income exceeds $145,000, so there are no surprises when the rule takes effect.
4. Stay in touch with your plan sponsor or advisor for updates on how these changes will be implemented in your specific retirement plan.

The Bottom Line

The 2026 401(k) updates bring both new opportunities and new considerations. The increased contribution limits allow savers to set aside more, while the SECURE Act 2.0 Roth catch-up rule shifts how higher earners save on a tax basis.

Take time now to check your contribution settings for next year, and make sure your savings strategy reflects both your goals and the new rules.

If you’d like help reviewing your plan or understanding how these changes could impact your retirement savings, contact us at Legacy. Our team can help you make the most of your retirement plan in 2026 and ensure you’re on track to meet your long-term goals.