As we move into 2026, retirement savers are facing important rule changes in employer plans like 401(k), 403(b), and 457(b) accounts. These changes affect base contribution limits, “catch-up” contribution limits for those over 50 and between the ages of 60-63, and the tax treatment of “catch-up” contributions for higher-income savers.

Key 401(k) Changes for 2026

The Limit for Base 401(k) Contributions Rises

For 2026, the maximum elective deferral, the amount an employee can contribute from their salary to a 401(k) plan, increases to $24,500, up from $23,500 in 2025. This adjustment reflects inflation and gives savers more room to build their nest eggs each year. Note: this change applies to contributors regardless of age.

Catch-Up Contributions Rise for Older Savers

So-called “catch-up” contributions, additional amounts that older savers can put aside beyond the standard limits, are also rising in 2026. These enhanced catch-up limits are designed to help those closer to retirement age accelerate savings, especially if they started late or temporarily paused contributions in the past.

• If you are 50 years of age or older in 2026, you can contribute an additional $8,000 on top of the regular $24,500 limit, for a total employee contribution of $32,500. That’s a bump up from the previous catch-up limit of $7,500.
• If you are between the ages of 60 and 63, a new “super catch-up” contribution limit applies. You can contribute up to $11,250 extra in 2026, taking your overall potential employee contribution limit to $35,750.

Catch-Up Contributions Must Be Roth for High Earners

Perhaps the most significant shift for 2026 impacts how catch-up contributions are taxed.

• Under a SECURE 2.0 provision taking effect in 2026, catch-up contributions made by participants with prior-year FICA wages over $150,000 must be designated as Roth contributions rather than traditional pre-tax contributions. This means you will pay tax on your catch-up contribution today rather than deferring the tax until retirement.

Note that your 401(k) plan must offer a Roth option for these contributions to take place. If your 401(k) doesn’t have a Roth feature, you might not be able to make catch-up contributions at all under the new rule. Check with your HR or plan administrator about whether your plan supports Roth contributions and, if not, whether it plans to add them.

Keeping Pace with the New Rules

By knowing the rules and planning ahead, you can make smarter decisions about when and how to save. The right moves in 2026 can help you grow your retirement nest egg while managing your tax bill and securing a more predictable income stream for later years.

If you’re unsure about how the new rules will impact your financial plan, please consult with a Crestwood financial advisor or tax professional.

Internal Revenue Service. “401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500.” IRS, 13 Nov. 2025, www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500