Kate_sept2004 | E+ | Getty Images<\/p>\n
As 2025 winds down, many financial advisors are preparing for 2026, which will bring key changes to saving for retirement in 401(k) plans<\/a>. <\/p>\n Among those shifts are contribution limit updates<\/a> and a major tax change<\/a> for certain investors, which could affect long-term planning. <\/p>\n “The most impactful change for next year will be to high earners,” said certified financial planner Juan Ros, a partner at Forum Financial Management, based in Scottsdale, Arizona.<\/p>\n More from Your Money:<\/p>\n Here’s a look at more stories on how to manage, grow and protect your money for the years ahead.<\/p>\n By the end of 2025, more than\u00a0144 million Americans<\/a>\u00a0will participate in so-called “defined benefit plans” through an employer, such as 401(k) plans, according to the Defined Contribution Institutional Investment Association.<\/p>\n The 401(k) changes for 2026 come as many Americans worry how inflation, stock market volatility and the U.S. political climate<\/a> could impact their nest eggs.<\/p>\n Here are some of the key things to know. <\/p>\n Bigger 401(k) contribution limits <\/p>\n Starting in 2026, you can funnel more savings<\/a> into your 401(k).<\/p>\n The employee deferral limit is $24,500 for 2026, up from $23,500 in 2025, the IRS announced in November. For investors age 50 or older, the catch-up contribution<\/a> will increase to $8,000 in 2026, up from $7,500. The “super catch-up contribution”<\/a> for savers age 60 to 63 remains at $11,250.<\/p>\n “These increases matter because they help retirement savers keep pace with rising incomes and inflation while reducing taxable income in high-earning years,” said CFP Andr\u00e9 Small, founder of advisory firm A Small Investment in Humble, Texas.<\/p>\n Currently, only a small percentage of 401(k) investors max out employee deferrals every year. <\/p>\n In 2024, only 14% of 401(k) participants maxed out their plans<\/a>, according to Vanguard’s 2025 How America Saves report, based on more than 1,400 qualified plans and nearly 5 million participants. <\/p>\n Typically, these investors are older, higher earners with longer tenure at their companies, the same report found.\u00a0To that point, nearly half of Vanguard participants making more than $150,000 annually maxed out deferrals. <\/p>\n On average, the combined 401(k) savings rate<\/a>, including employer deposits, was estimated at 12% for 2024, according to Vanguard.\u00a0<\/p>\n Higher earners could lose a tax break<\/p>\n Typically, 401(k) catch-up contributions for investors age 50 and older can be traditional pretax or after-tax Roth, depending on what the plan allows.<\/p>\n But starting in 2026, catch-up contributions generally must be after-tax Roth<\/a> if you earned more than $150,000<\/a> from your current employer in 2025, according to the IRS. Enacted via the Secure 2.0 Act<\/a>\u00a0of 2022, this threshold was adjusted for inflation for 2026.<\/p>\n “Effectively, this change will mean high earners will pay more in tax now,” said Ros from Forum Financial Management.<\/p>\n Pretax 401(k) contributions provide an upfront tax break, but investors pay regular income taxes upon withdrawal. By comparison, after-tax Roth contribution growth is tax-free. <\/p>\n