Major 401(k) Change Coming in 2026 — High Earners Must Act Now

Core Insights - Regular contributions to a 401(k) are essential for a comfortable retirement, providing tax advantages and a steady income stream during retirement [1][3] Group 1: 401(k) Contributions - A 401(k) is a retirement savings account offered by employers, allowing employees to contribute a portion of their income before taxes [3] - Contributions to a 401(k) are tax-deferred, meaning taxes are paid upon withdrawal in retirement, potentially resulting in a lower overall tax burden [4] - Employers may offer matching contributions, effectively providing free money that can grow over time [5] Group 2: Contribution Limits and Changes - As of 2025, individuals under 50 can contribute up to $23,500 annually, with those aged 50 and older allowed an additional $7,500 catch-up contribution, increasing to $11,250 for ages 60 to 63 [6] - The Secure 2.0 Act introduces changes affecting employees aged 50 and older earning $145,000 or more, requiring them to contribute catch-up funds to a Roth 401(k) instead of a traditional 401(k) [7][8] - Roth 401(k) contributions are taxed immediately, allowing for tax-free growth and withdrawals in retirement [8]