Even though it is already February, many people have not reviewed their retirement contribution settings for the new year. As a result, their 401(k) or IRA contributions may still be based on last year’s limits, even though contribution limits increased for 2026. Taking a few minutes to review these numbers can help ensure your savings stay on track. Below are the key updates to know this year.
2026 Contribution Limits briefly
Workplace Retirement Plans
(401(k), 403(b), and 457 plans)
For 2026, employee contribution limits have increased:
- Employee contribution limit: $24,500
- Age 50 and older catch-up: Additional $8,000 (total $32,500)
- Ages 60–63 “super” catch-up: Up to $35,750
If you are eligible for catch-up contributions, these higher limits may allow you to save more as you approach retirement.
Individual Retirement Accounts (IRAs)
(Traditional and Roth combined)
IRA limits have also increased:
- Base contribution limit: $7,500
- Age 50 and older catch-up: Additional $1,100 (total $8,600)
Eligibility for Roth IRA contributions may depend on income, and the deductibility of traditional IRA contributions can vary based on your tax situation and whether you participate in a workplace plan.
A Key Change for High Earners in 2026
There is an important update for higher-income earners. If your 2025 wages exceeded $150,000, any 401(k) catch-up contributions made in 2026 must be Roth contributions, rather than pre-tax. This means:
- Catch-up contributions are made with after-tax dollars
- Qualified withdrawals may be tax-free in the future
- If your employer’s plan does not offer a Roth option, catch-up contributions may not be available
Because plan features vary, it is important to understand how your employer’s retirement plan is structured.
Required Minimum Distributions & Withdrawal Rules
When reviewing retirement strategies, a few general rules are helpful to keep in mind:
- Most retirement accounts require required minimum distributions (RMDs) starting at age 73
- Roth accounts are generally exempt from RMDs during the account owner’s lifetime
- Withdrawals before age 59½ may be subject to taxes and penalties
- Roth IRAs must meet both the 5-year holding requirement and the age 59½ rule for qualified distributions
Rules vary by account type, and individual circumstances may affect how these rules apply.
What to Review Now
This may be a good time to:
- Confirm your contribution rate reflects 2026 limits, not last year’s
- Check whether your employer plan offers a Roth option
- Understand how catch-up contributions are handled under your plan
Retirement planning is not just about saving more—it is about using the options available to you in a way that fits your situation.
A Note from Cresta Advisors
At Cresta Advisors, we provide financial planning services and wealth management services focused on long-term clarity and informed decision-making. As fee-only financial advisors in Laredo, TX, we work with individuals, families, and small business owners, including offering guidance on 401(k) planning for small businesses, planning design considerations, and employee benefit education. Reviewing retirement strategies regularly can help ensure they remain aligned with your goals today and in the future.
This blog contains general information that may not be suitable for everyone. The information contained herein should not be construed as personalized investment advice. There is no guarantee that the views and opinions expressed in this blog will come to pass. Investing in the stock market involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. Cresta Advisors does not offer legal or tax advice. Please consult the appropriate professional regarding your individual circumstance. Past performance is no guarantee of future results.
