A Major 401(k) Change Is Coming in 2026: Who Is Affected and How to Protect Your Retirement

Starting in 2026, a new IRS rule tied to SECURE 2.0 will change how some older workers can save extra money for retirement.

The change affects catch-up contributions and could impact your taxes in the final years before retirement.
 

What Is Changing in 2026?

Catch-up contributions allow workers age 50 and older to save more for retirement each year.

For 2025, workers 50+ can contribute an extra $7,500 on top of the regular limit.

Contribution limits are not changing.

What is changing is where those catch-up dollars must go for certain workers.
 

Who the New IRS Rule Applies To

You are affected by the new rule if:

• You are age 50 or older, and

• You earned more than $145,000 in wages in the previous calendar year.

If both apply, then starting in 2026: All catch-up contributions must go into a Roth account (IRS Notice 2024-2).

That means:

• No upfront tax deduction on those catch-up dollars

• Taxes are paid now, not later

The rule applies to 401(k), 403(b), 457(b), SEP IRAs, SIMPLE IRAs.
 

Who Is NOT Affected

Nothing changes if:

• You earn $145,000 or less, or

• You already make Roth-only contributions

These workers can still choose between traditional (pre-tax) and Roth (after-tax) catch-up contributions.
 

How This Could Affect Your Retirement Plan

Potential downside:

• Higher taxable income during your last working years

• Less immediate tax relief when cash flow may already be tight

Potential upside:

• Roth accounts provide tax-free income in retirement

• Can help manage future taxes and required withdrawals

The rule doesn’t limit how much you can save — it only changes when you pay taxes.

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