Saving for retirement often becomes a higher priority later in life. Many people reach their peak earning years in their 50s and realize they need to set aside more for the future. This is where catch up contributions come into play. A major change is coming in 2026 that will affect how certain workers make catch up contributions to their company 401(k) plans, and it is important to understand how it may apply to you.
What Are Catch Up Contributions
Catch up contributions are additional amounts that individuals age 50 and older are allowed to contribute to certain retirement accounts, including 401(k) plans, above the standard annual contribution limit. Congress created this option to help older workers accelerate their retirement savings if they started late or experienced setbacks earlier in their careers.
Who Is Eligible to Make Catch Up Contributions
Generally, anyone who is age 50 or older by the end of the calendar year and participates in a 401(k) plan is eligible to make catch up contributions. These contributions are voluntary and are made through payroll deductions just like regular 401(k) contributions.
Beginning January 1, 2026, a new rule will apply to certain higher income employees. If your wages from the same employer exceeded $145,000 in the prior year, adjusted for inflation, your catch up contributions must be made as Roth contributions. This means the contributions will be made with after tax dollars rather than pre tax dollars.
Employees who earn below that income threshold may still be allowed to make catch up contributions on a pre tax basis, depending on how their employer’s plan is structured.
How Much Can You Contribute
For 2026, the standard 401(k) contribution limit is $24,500, with an additional $8,000 allowed as a catch up contribution for those age 50 and older. This brings the total possible contribution to $32,500 for eligible individuals.
What the 2026 Change Means for You
The 2026 change does not eliminate catch up contributions, but it does change the tax treatment for certain workers. High earners who qualify will still be able to save extra for retirement, but they will do so through Roth contributions. This may impact current tax planning, take home pay, and long term retirement strategies.
Because retirement savings decisions often tie into broader financial and estate planning goals, this change is a good reminder to review how your retirement accounts fit into your overall plan.
Planning Ahead
Understanding how catch up contributions work and how upcoming changes may affect you can help you make informed decisions about retirement and legacy planning. Retirement accounts often play a significant role in estate plans, beneficiary designations, and long term wealth preservation strategies.
If you would like guidance on how retirement accounts, tax changes, and long term planning work together, our experienced estate planning attorneys at Grissom Law Firm, LLC are here to help. Our team works with individuals and families to align retirement planning with estate and wealth preservation goals. Contact Grissom Law Firm, LLC today to schedule a consultation and discuss your planning options with confidence.
Disclaimer
This Blog/Web Site is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide legal advice. By using this blog site you understand that there is no attorney client relationship between you and Grissom Law, LLC.