Published • loading... • Updated
Some Americans Will Lose Popular 401(k) Tax Break in Major Retirement Rule Change Starting 2026
Starting in 2026, high earners making $145,000 or more must make 401(k) catch-up contributions to Roth accounts, removing the prior upfront tax break, IRS rules say.
- Last month, the IRS implemented a SECURE 2.0 Act provision requiring high earners earning $145,000 or more to use Roth accounts for 401 catch-up contributions starting in 2026, which means they will lose the upfront tax break.
- Under rules in effect through 2025, workers aged 50 and up could contribute $23,500 with a $7,500 catch-up contribution to either traditional or Roth 401 accounts.
- A 2025 Vanguard report found that only 16% of eligible workers made catch-up deferrals in 2024 across more than 1,400 plans and nearly 5 million participants, with most earning $150,000 or more.
- Advisors say savers should act now and Patrick Huey, certified financial planner, urges working with advisors for multi-year tax projections as experts warn a popular tax break changes next year.
- For longer-term planning, Roth 401 accounts lack upfront tax breaks but offer tax-free growth, while traditional 401 accounts provide immediate deductions; workers ages 60 to 63 face a catch-up limit of $11,250 in 2025.
Insights by Ground AI
16 Articles
16 Articles
High earners could soon lose a tax break from this 401(k) change
Starting in 2026, 401(k) catch-up contributions for certain high earners must be after tax Roth, rather than pretax. Here’s what to know about the change.Read MoreThe post High earners could soon lose a tax break from this 401(k) change first appeared on The Who Dat Daily.
·Englewood Cliffs, United States
Read Full Article
Father's Day SaleGet 40% off Vantage subscriptions for yourself or a friend.Get Started
Coverage Details
Total News Sources16
Leaning Left1Leaning Right2Center11Last UpdatedBias Distribution79% Center
Bias Distribution
- 79% of the sources are Center
79% Center
C 79%
14%
Factuality
To view factuality data please Upgrade to Premium
