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Are you 50+? This 401(k) change could affect you

January 5, 2026

If you are 50+, do you know how your catch-up contributions are changing?

  • Who Is Affected? Employees aged 50+ whose prior-year W-2 FICA wages from the same employer exceed $145,000 (indexed) must make any 2026 catch-up contributions as Roth (after-tax).

  • When It Applies? The statute kicks in for 2026 contributions. Final IRS regulations took effect on November 17, 2025, and generally apply starting in 2027. For 2026, plans may operate under areasonable and good-faith interpretation.

  • What to Verify? Your plan must offer a Roth source. If it doesn’t, affected employees can’t make catch-ups until Roth is added.

  • With a Roth IRA, to qualify for the tax-free and penalty-free withdrawal of earnings, Roth IRA distributions must meet a five-year holding requirement and occur after age 59½. Tax-free and penalty-free withdrawals can also be taken under certain other circumstances. The original Roth IRA owner is not required to take minimum annual withdrawals. With a Roth 401(k), employer matching with pre-tax dollars is not distributed tax-free during retirement.

At Cresta Advisors, Fee-Only Financial Advisors in Laredo TX, we help individuals and business owners understand how changes like these affect their 401(k) strategy, Financial planning, and long-term retirement goals. For those 50+ or managing employer retirement plans, reviewing Roth provisions, employer matching, and catch-up contributions is an important part of comprehensive Financial planning services, Wealth Management Services, and Estate Planning services.

Financial Advisors play a key role in helping you stay informed, because thoughtful planning today supports a more confident retirement tomorrow.

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Are you 50+? This 401(k) change could affect you
If you are 50+, do you know how your catch-up contributions are changing? At Cresta Advisors, Fee-Only Financial Advisors in Laredo TX, we help individuals and business owners understand how changes like these affect their 401(k) strategy, Financial planning, and long-term retirement goals. For those 50+ or managing employer retirement plans, reviewing Roth provisions, employer matching, and catch-up contributions…