How To Handle the New 401(k) Rule That Goes Into Effect in 2026

In 2026, a caller IRS regularisation volition reshape 401(k) program contributions for millions of workers. Originally a portion of the SECURE 2.0 Act of 2022, the regularisation alters however high-income Americans tin prevention for status — peculiarly arsenic it pertains to catch-up contributions.

Here are each the details you request to cognize astir however the caller regularisation affects your 401(k) plan.

When it comes to contributing wealth to status accounts, employees person yearly publication limits assigned by the IRS — oregon a maximum magnitude they are legally allowed to lend per calendar year. Employees aged 50 and over, however, are allowed further catch-up contributions — amounts beyond the standard, yearly bounds designed to assistance employees “catch up” connected status savings if they person fallen behind. According to the IRS, for the 2025 taxation year, workers nether 50 are allowed up to $23,500 successful status contributions; workers implicit 50 are allowed an further $7,500 successful catch-up contributions.

Previously, employees had the enactment of allocating these catch-up contributions to either a accepted 401(k) — utilizing pre-tax dollars — oregon a Roth 401(k) — utilizing after-tax dollars. Starting successful 2026, however, if employees earned much than $145,000 successful the erstwhile year, their 401(k) catch-up contributions volition person to spell into a Roth 401(k). This caller regularisation volition not lone use to a accepted 401(k), but besides a 403(b), 457(b), SEP IRA and SIMPLE IRA.

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According to fiscal experts, the caller regularisation won’t drastically overhaul however workers prevention for retirement, but it whitethorn necessitate them to instrumentality a fewer steps successful preparation:

Director of readying and proposal astatine Key Wealth, Tina A. Myers, suggested reviewing your yearly income and status contributions earlier the twelvemonth ends to spot if this caller regularisation volition impact you. If you are already utilizing an all-Roth strategy oregon earned nether $145,000 annually, thing volition alteration for you. If you were utilizing a accepted 401(k) and/or made implicit $145,000, work on.

“If your leader doesn’t connection a Roth 401(k) enactment by 2026, you won’t beryllium allowed to marque catch-up contributions astatine all,” stated Andrew Latham, CFP and contented manager astatine SuperMoney.com. So cheque with your leader and propulsion them to get compliant if they aren’t already. Fortunately, much employers person adopted Roth 401(k) options implicit the past fewer years successful mentation for this caller regulation.