Big changes hit 401(k)s in 2026, including a major tax shift that could affect some investors

If you are reviewing your retirement savings for 2026, there are changes set for 401(k)s that you should be aware of.

The changes include updates for contribution limits, as well as a change that could impact higher-income individuals.

Here’s what you need to know ahead of tax season, plus an explainer of the rules around Roth conversions and how you can take advantage of new matching rules and automatic enrollment features for your employer-sponsored plan.

The 401(k) contribution limits for 2026 for individuals increase to $24,500, up from $23,500 in 2025. (1)

The limits for catch-up contributions also change for 2026, with the limit for those age 50 and over rising to $8,000, up from $7,500 in 2025. There is a higher catch-up contribution for those aged 60 to 63 — $11,250, which is unchanged from 2025.

However, there’s a change for 2026 catch-up contributions that could impact higher-income earners: Previously, catch-up contributions could be made to traditional pre-tax 401(k)s or Roth 401(k)s. (2)

Starting in 2026, for those who earned more than $145,000 in the previous year, catch-up contributions will typically need to be to Roth 401(k)s.

For those workers over age 50 with higher incomes, this change means you may have to reassess your retirement planning.

The new change to catch-up contributions could mean you’ll have more taxable income in the next filing year. For higher-income earners who rely on the tax savings from pre-tax 401(k) contributions, this change could have a big impact.

For those who have not maxed out their catch-up contributions yet for 2025, it may be worth considering whether you are able to do so before year-end, to take advantage of the contribution room before the new rule is in effect.

When you contribute to a Roth 401(k), your contributions are made with after-tax income. With traditional 401(k) contributions, the contribution is taken from your income before you pay tax on it; this lowers your taxable income, resulting in tax savings. (3)

When it comes to withdrawals for Roth 401(k)s, you will not pay any tax on your withdrawals — or on any earnings from your investments. With a Roth 401(k), you are also not required to take required minimum distributions (RMDs). (4)

Withdrawals from traditional 401(k)s are taxable, however, and it’s typical that you’ll be in a lower tax bracket during retirement. You must take RMDs from traditional 401(k)s, and if you don’t follow the rules for when and how much you withdraw, you could face tax penalties. (5)

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So, how much will high earners have to pay in tax for catch-up contributions to Roth 401(k)s? The marginal tax rate for 2026 for married couples who earn more than $201,775 is 32%. (6)

For someone in this tax bracket who is 60 years old, and wants to make a “super” catch-up contribution of $11,250, they could pay as much as $3,600 in tax.

However, they will not be taxed on their qualified withdrawals, or any earnings, because it is an after-tax contribution.

If you think these changes will impact you, consider speaking to your employer before the new year about whether they offer Roth 401(k) plans.

While data from Plan Sponsor Council of America shows that 95.6% of employers offer a Roth contribution option (7), it’s best to be sure your employer has an option, or if they will offer it in 2026.

If your retirement plan involves making catch-up contributions, and you think that you could be earning above $145,000 in the future, consider speaking to your financial advisor about adjusting your retirement plans to take the new rules into account.

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

IRS (1); (4); (5); (6); CNBC (2); U.S. Securities and Exchange Commission (SEC) (3); Plan Sponsor Council of America (PSCA) (7).

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.