By Haddon Libby
The New Year brings significant updates to 401(k)s, IRAs, and other retirement accounts. These changes offer opportunities to boost savings but also introduce complexities, particularly for those earning $150,000 or more. Here’s a concise overview of what’s coming and how to prepare.
Increased Contribution Limits
For 401(k), 403(b) and most 457 plans, the employee deferral limit will rise to $24,500 in 2026, up from $23,500 in 2025. Total contributions, including employer matches, will increase to $72,000, up from $70,000. These higher limits allow savers to set aside more pre-tax dollars, reducing taxable income while building retirement wealth.
Catch-up contributions for those aged 50 and older will also rise to $8,000, up from $7,500, enabling a total contribution of $32,500. For participants aged 60 to 63, the “super catch-up” contribution remains at $11,250, allowing up to $35,750. These adjustments help older workers accelerate savings as retirement nears.
Mandatory Roth Catch-Up for High Earners
A significant new provision brought to us by the SECURE 2.0 Act requires participants aged 50 and older with wages exceeding $150,000 in 2025 to make catch-up contributions via Roth only. Roth contributions are made after-tax (vs. a 401(k) which is pre-tax), eliminating the upfront tax deduction but offering tax-free growth and withdrawals in retirement. If an employer’s plan lacks a Roth option, high earners may need to open a Roth account outside of their employer’s retirement plan.
Paper Statement Requirement
While everything is going electronic, a new rule requires plans like 401(k)s to send at least one paper statement annually unless participants opt for electronic delivery. Defined benefit plans like pensions will require one statement every three years.
IRA Contribution Limits and Phase-Outs
Traditional and Roth IRA contribution limits will increase to $7,500, up from $7,000 in 2025. For those aged 50 and older, the catch-up contribution will rise to $1,100, allowing a total of $8,600. Roth IRA income phase-out ranges will also adjust: for singles, $153,000–$168,000 (up from $150,000–$165,000); for married couples filing jointly, $242,000–$252,000 (up from $236,000–$246,000). For traditional IRA deductions, phase-out ranges for singles covered by a workplace plan will rise to $81,000–$91,000, and for married couples, $129,000–$149,000. You can calculate your amount at www.irs.gov/retirement-plans.
SIMPLE Plans and Healthcare Spending Accounts (HSAs)
SIMPLE retirement account contribution limits will increase to $17,000 (or $18,100 for certain plans), with catch-up contributions for those 50 and older rising to $4,000 (or $3,850 for some plans). For those aged 60 to 63, the catch-up limit remains $5,250.
Health Savings Accounts (HSAs) will see contribution limits rise to $4,400 for self-only coverage and $8,750 for family coverage, with catch-up contributions for those 55 and older staying at $1,000. HSA-compatible high-deductible health plans will have higher minimum deductibles and out-of-pocket limits.
Saver’s Credit and Charitable Distributions
The Saver’s Credit income limit will increase to $80,500 for married couples filing jointly, $60,375 for heads of household, and $40,250 for singles. Qualified charitable distributions from IRAs will rise to $111,000, with a one-time split-interest entity distribution limit of $55,000.
Strategic Planning for 2026
These changes provide opportunities but require action. High earners should assess the Roth catch-up mandate’s tax implications and confirm their plan offers a Roth option. Savers can maximize contributions, even by small increments, to leverage higher limits and compounding. Employers may need to update plans to comply with new rules, so check with your administrator. For IRAs, evaluate Roth versus traditional contributions based on current and future tax brackets. A tax professional or financial advisor like us can help tailor these changes to your goals.
With higher limits and new rules, 2026 is a pivotal year for retirement planning. Stay informed and proactive to make the most of these opportunities.
Haddon Libby is the Founder and Chief Investment Officer of Winslow Drake Investment Management, a local RIA firm. For more information on our services, please visit, www.WinslowDrake.com.
