If you were a “high” earner in 2025 then you definitely need to read this post! As I recently wrote, I got my new 401k setup and had everything planned out but I came across an article that said there are new 401k rules for 2026 and it said some troubling things.
I asked AI to tell me what the changes were and it repeated the same thing:
AI
Here’s a breakdown of the 2026 contribution limits and special rules for Internal Revenue Service (IRS)–governed 401(k) plans — and what they mean if you earn more than about $150,000. (Yes, the “high-earner” rule changes for 2026 are relevant.)
✅ 2026 Standard 401(k) Contribution Limits
For 2026, the standard elective deferral limit (employee contributions) to a 401(k), 403(b), or similar plan is $24,500 — up from $23,500 in 2025.
If you’re under 50, that $24,500 is your total limit (regardless of pre-tax vs. Roth contributions).
The total limit for combined employee + employer contributions under defined-contribution plans is now $72,000 for 2026.
🎯 Catch-Up (Age-Based) Contributions
If you are age 50 or older in 2026:
Standard catch-up contribution limit is $8,000, raising total possible employee contributions to $32,500.
For people aged 60–63, there is a “super” catch-up — in 2026 you may contribute $11,250 extra, which could bring total to $35,750 (assuming plan allows).
Note: Not all plans offer catch-up contributions — it depends on your employer’s plan document.
🔒 High-Earner Rule: What Changes in 2026
Beginning in 2026, if your prior-year Social Security wages (Box 3 of W-2) exceeded $150,000 — roughly equivalent to being a “high earner” — and you are eligible for catch-up contributions (i.e., age 50 or older), your catch-up contributions must be made as Roth (after-tax) contributions.
In practical terms: if you earn more than $150,000 and want to take advantage of the extra catch-up space, you’ll need access to a Roth 401(k) option at work.
If your employer’s plan does not offer a Roth 401(k), then under the rule your catch-up contributions could be barred entirely.
🧮 What It Means for Someone Earning $150,000+
Under 50: The high-earner rule for catch-ups doesn’t apply. You can contribute up to $24,500 (pre-tax or Roth) in 2026.
Age 50+: You can still do catch-up contributions — but if your prior-year wages were over $150,000, the extra must go into Roth (after-tax) rather than traditional pre-tax.
If your employer lacks a Roth option: You may lose access to catch-up contributions entirely, unless the plan is amended.
Employer contributions still apply: The high-earner rule affects only the catch-up portion. Employer contributions and standard deferrals remain subject to usual rules and ceilings.
📌 Other 2026 Retirement-Plan Limits
The $72,000 total contribution cap (employer + employee) applies to defined contribution plans like 401(k).
For non-401(k) retirement vehicles like IRAs, contribution limits and phase-outs also changed — but those are separate rules and depend on income, coverage by workplace plans, etc.
💡 Bottom Line
2026 brings more room to save in a 401(k), but if you’re a high earner (roughly $150,000+ in prior-year wages) and over 50, catch-up contributions must be Roth (post-tax). That changes the tax timing of your contributions — paying taxes now instead of when you withdraw.
If you want, I can run through a few hypothetical examples (e.g., you’re 52 and earn $180K; or 58 and earn $120K) to show exactly what your contribution options look like for 2026.
My Thoughts
I am definitely over the $150k for 2025 and I’m glad I found out about this rule change now and avoid another tax headache at the end of next year. Bottom line, it seems I will max my deferred 401k to the limit of $24,500 and the $8,000 catch up contribution will have to go into a Roth 401k. I put a reminder in my calendar to switch my check my contributions every month to make sure I don’t go over the $24.5k limit. I’m not sure why the IRS did this other than to raise more tax revenue.
Share The Wealth
Have you made any changes to your 401k contributions yet? Let me know in the comments below.