Saving in a 401(k) in 2026? You May Not Get the Tax Break You're Expecting.

Core Insights - The article discusses the importance of utilizing tax-advantaged accounts for retirement savings, highlighting the benefits of IRAs and 401(k)s while also noting the penalties for early withdrawals [1][2][3] Group 1: Retirement Savings Strategies - Tax-advantaged accounts like IRAs and 401(k)s are recommended for retirement savings to reduce IRS bills [1] - Early retirees may consider taxable brokerage accounts due to penalties associated with early withdrawals from tax-advantaged accounts [2] - Traditional retirement plans allow pre-tax contributions, leading to tax-deferred growth, with taxes applied upon withdrawal [3] Group 2: Changes in 401(k) Contributions - In 2026, 401(k) contribution limits will increase, allowing savers under 50 to contribute up to $24,500 and those 50 and older to contribute a total of $32,500, including catch-up contributions [5] - A new "super catch-up" contribution of $11,250 will be available for savers aged 60 to 63, replacing the general $8,000 catch-up for those 50 and older [5] Group 3: Catch-Up Contribution Rules - Starting this year, higher earners will be restricted from making pre-tax catch-up contributions, which may affect their tax planning [8] - For savers aged 50 and older, catch-up contributions can now only be made in a Roth 401(k) if their income exceeds $150,000, limiting options if their workplace plan lacks a Roth option [9]