A new rule took effect at the outset of 2026 that altered how high-income earners make catch-up contributions to their workplace\u00a0401(k) retirement plan<\/a>, as those over the age of 50 whose earnings subject to payroll tax are $150,000 or more must make catch-up contributions to a Roth 401(k).<\/p>\n The change, which was required by the SECURE 2.0 Act of 2022, means that affected workers will miss out on the upfront tax deduction they were able to use previously when making catch-up contributions to traditional 401(k) accounts. The deduction reduced the worker’s taxable income based on their contribution amount.<\/p>\n However, workers affected by the change will potentially benefit from the advantages that Roth accounts provide, such as tax-free earnings and withdrawals once the five-year aging rule for the plan has been satisfied.<\/p>\n IRS REVEALS UPDATED CONTRIBUTION LIMITS FOR 2026<\/a><\/p>\n The catch-up contribution changes impact high-earners, who will have to put those contributions into an after-tax Roth 401(k). (iStock)<\/p>\n In 2026, workers can contribute up to $24,500 to their 401(k) plan \u2013 an increase from $23,500 last year.<\/p>\n Workers over the age of 50 are eligible for an additional catch-up contribution of $8,000 this year, up $500 from the 2025 threshold. Some plans allow enrollees in the 60 to 63 age range to make a larger\u00a0catch-up contribution<\/a> of $11,250.<\/p>\n The new rule change for catch-up contributions is permanent, and the income threshold is determined based on the prior year’s W-2 form provided by the employer sponsoring the plan.\u00a0<\/p>\n TRUMP SAYS HE’S ‘NOT A HUGE FAN’ OF 401(K) WITHDRAWAL PLAN FOR HOMEBUYERS’ DOWN PAYMENTS<\/a><\/p>\n The IRS made the changes as required by the SECURE 2.0 Act of 2022. (Kayla Bartkowski\/Getty Images)<\/p>\n So if a worker earned $150,000 or more in the\u00a02025 tax year<\/a>, the adjustment would take effect for contributions made during the 2026 tax year.<\/p>\n Workers earning less than $150,000 are unaffected by the rule change and may continue to make catch-up contributions to their 401(k) \u2013 whether it’s a traditional or Roth 401(k).<\/p>\n Fidelity notes that those saving for retirement who may be rethinking their strategy following the change could consider other ways to save for their retirement.<\/p>\n TRUMP’S 401(K) EXPANSION ORDER: WHAT NEW INVESTMENT OPTIONS WILL BE AVAILABLE?<\/a><\/p>\n The 401(k) catch-up changes take effect for retirement contributions made in 2026. (Angela Weiss \/ AFP for Getty Images)<\/p>\n![\"couple](\"https:\/\/www.newsbeep.com\/ca\/wp-content\/uploads\/2026\/01\/Financial-planning-seniors-iStock.jpg\")
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