Saving in a 401(k) in 2026? You May Not Get the Tax Break You're Expecting.

• Workers ages 50 and older tin marque catch-up contributions successful a 401(k).

• Starting this year, higher earners volition beryllium barred from making pre-tax catch-ups.

• It's important to program for that, since it could interaction your taxes.

• The $23,760 Social Security bonus astir retirees wholly place ›

If you're going to prevention for retirement, it mostly makes consciousness to bash truthful successful a tax-advantaged account. That way, you tin shave down your IRS measure successful immoderate signifier oregon signifier successful the people of gathering up a nest egg.

Of course, this doesn't needfully mean you should support all of your status savings successful a tax-advantaged account. IRAs and 401(k)s enforce penalties for taking withdrawals anterior to property 59 and 1/2. So if aboriginal status is connected your radar, you whitethorn privation to crook to a taxable brokerage relationship for astatine slightest a information of your nest egg.

Otherwise, you mightiness arsenic good bask the benefits 401(k)s and IRAs offer. And if you're successful a higher taxation bracket, you whitethorn beryllium inclined to prevention for status successful a accepted 401(k) oregon IRA.

With a accepted status plan, your wealth goes successful connected a pre-tax basis. Investments successful these accounts past get to bask tax-deferred growth, and withdrawals are taxable to taxes.

In 2026, the publication limits for 401(k)s is increasing. And if you're 50 oregon older, you whitethorn privation to instrumentality vantage of 401(k) catch-ups.

But there's a caller regularisation coming to 401(k) catch-up contributions this twelvemonth that affects higher earners. And it whitethorn besides person an interaction connected your taxes.

This year, 401(k) publication limits are expanding compared to 2025. Savers nether property 50 volition beryllium capable to lend up to $24,500, portion those 50 and implicit tin marque an $8,000 catch-up for a full publication of $32,500.

There's besides a peculiar ace catch-up publication disposable to savers specifically betwixt the ages of 60 and 63. That ace catch-up is worthy $11,250, and it replaces the wide $8,000 catch-up for savers 50 and over.

But it's not conscionable that 401(k) publication limits are changing successful 2026. The rules for catch-up contributions are changing for higher earners.

Until this year, savers 50 and implicit could marque a 401(k) catch-up successful either a accepted workplace program oregon a Roth 401(k) plan. Starting this year, the lone enactment for higher earners is to marque a catch-up Roth style.

If you earned $150,000 oregon much successful 2025, you'll beryllium constricted to a Roth 401(k) successful 2026 if you privation to marque catch-up contributions. That could beryllium a problem, though, if your workplace 401(k) doesn't person a Roth option.