As 2025 winds down, many financial advisors are preparing for 2026, which will bring key changes to saving for retirement in 401(k) plans.
Among those shifts are contribution limit updates and a major tax change for certain investors, which could affect long-term planning.
"The most impactful change for next year will be to high earners," said certified financial planner Juan Ros, a partner at Forum Financial Management, based in Scottsdale, Arizona.
By the end of 2025, more than 144 million Americans will participate in so-called "defined benefit plans" through an employer, such as 401(k) plans, according to the Defined Contribution Institutional Investment Association.
The 401(k) changes for 2026 come as many Americans worry how inflation, stock market volatility and the U.S. political climate could impact their nest eggs.
Here are some of the key things to know.
Bigger 401(k) contribution limits
Starting in 2026, you can funnel more savings into your 401(k).
The employee deferral limit is $24,500 for 2026, up from $23,500 in 2025, the IRS announced in November. For investors age 50 or older, the catch-up contribution will increase to $8,000 in 2026, up from $7,500. The "super catch-up contribution" for savers age 60 to 63 remains at $11,250.
"These increases matter because they help retirement savers keep pace with rising incomes and inflation while reducing taxable income in high-earning years," said CFP André Small, founder of advisory firm A Small Investment in Humble, Texas.
Currently, only a small percentage of 401(k) investors max out employee deferrals every year.
In 2024, only 14% of 401(k) participants maxed out their plans, according to Vanguard's 2025 How America Saves report, based on more than 1,400 qualified plans and nearly 5 million participants.
Typically, these investors are older, higher earners with longer tenure at their companies, the same report found. To that point, nearly half of Vanguard participants making more than $150,000 annually maxed out deferrals.
On average, the combined 401(k) savings rate, including employer deposits, was estimated at 12% for 2024, according to Vanguard.Â
Higher earners could lose a tax break
Typically, 401(k) catch-up contributions for investors age 50 and older can be traditional pretax or after-tax Roth, depending on what the plan allows.
But starting in 2026, catch-up contributions generally must be after-tax Roth if you earned more than $150,000 from your current employer in 2025, according to the IRS. Enacted via the Secure 2.0 Act of 2022, this threshold was adjusted for inflation for 2026.
"Effectively, this change will mean high earners will pay more in tax now," said Ros from Forum Financial Management.
Pretax 401(k) contributions provide an upfront tax break, but investors pay regular income taxes upon withdrawal. By comparison, after-tax Roth contribution growth is tax-free.
Typically, the choice between Roth vs. pretax catch-up 401(k) contributions hinges on several factors, including your current and expected future tax brackets, experts say. While higher earners could lose a current-year tax break in 2026, they can run projections with an advisor to strategize for long-term tax planning goals.