401(k) Rules Are Changing Under Trump - And People in Their 40s May Not Like What's Happening

Your 40s can be some of your most important retirement-saving years. Earnings may be higher than they were earlier in your career, yet retirement is close enough that changes to your workplace account deserve more attention. Several 401(k) rules are shifting now, and others are being proposed, which could eventually change how you build your retirement plan. Not every change, however, originated with the current administration.

For workers in their 40s, the key is separating what's already law from what could still change.

Bigger catch-up contributions are waiting at age 50

The basic 401(k) contribution limit is $24,500 for 2026, according to the IRS. Once you reach age 50, plans can allow another $8,000 in catch-up contributions, bringing the potential employee total to $32,500.

Workers ages 60 through 63 get an even larger opportunity. Under a change created by the SECURE 2.0 Act of 2022, their 2026 catch-up limit is $11,250 instead of $8,000. For someone in their 40s today, these aren't immediate benefits, but they're useful numbers to know when projecting how much saving capacity may increase later.

Higher earners face a Roth catch-up requirement

Another SECURE 2.0 provision can matter more to workers who expect their earnings to climb. Beginning in 2026, the IRS says workers whose prior-year wages from the employer sponsoring the plan exceeded $150,000 generally must make their catch-up contributions on a Roth basis if the plan offers catch-ups.

That means those catch-up dollars don't receive the same immediate federal income-tax break as traditional pre-tax contributions. The trade-off is that qualified Roth withdrawals can be tax-free later. Similarly, this rule also comes from SECURE 2.0 rather than from a new Trump administration policy.

Trump wants more alternative assets in 401(k)s

A separate change does trace directly to the current administration. In August 2025, President Trump signed an executive order directing federal regulators to reconsider rules and guidance affecting access to alternative investments inside defined-contribution plans. The order specifically includes private-market investments, real estate, commodities, infrastructure, and actively managed vehicles investing in digital assets.

The Department of Labor followed with a proposed rule in March 2026 that would clarify how plan fiduciaries could evaluate investments containing alternative assets and create process-based safe harbors. It asks fiduciaries to consider factors including fees, liquidity, benchmarks, valuation, performance, and complexity. However, this is still a proposal — it doesn't force your employer to add private equity, crypto, or other alternatives to your 401(k).

More choices don't automatically mean better choices

For someone in their 40s, alternative investments could be available for decades if employers eventually adopt them. That long runway can make diversification appealing, but assets such as cryptocurrency can also experience sharp price swings, while private investments may bring higher fees, less liquidity, and harder-to-understand valuations.

The Department of Labor's own proposal highlights those considerations rather than declaring alternatives inherently better or worse. If new choices eventually appear in your plan, don't assume they're superior simply because they're new. Look at the investment's purpose, fees, volatility, liquidity, and how much exposure you already have elsewhere before adjusting your allocation.

The basic 401(k) structure hasn't disappeared

Despite the attention around changing rules, the core benefits of a 401(k) remain familiar. Traditional contributions can generally reduce current taxable income, Roth contributions offer a different tax treatment, and employers can still make matching contributions when their plan provides for them.

Contribution limits also continue to receive periodic cost-of-living adjustments. So workers in their 40s don't necessarily need to overhaul a long-term strategy because Washington changes one rule. Consistent contributions, capturing an available employer match, maintaining diversification, and periodically reviewing the plan can still do much of the heavy lifting.

Bottom line

Would your retirement strategy still work if future catch-up contributions had to be Roth, or if your employer added private equity or digital-asset exposure to the investment menu? Those possibilities are worth understanding now, but neither calls for an immediate portfolio overhaul.

Use your 40s to pressure-test your savings rate, tax mix, and investment allocation while you still have years to make gradual adjustments. A financial professional can help evaluate how the enacted SECURE 2.0 rules and any future alternative-asset changes fit your specific circumstances. Staying informed without reacting to every policy headline may be one of the more reliable ways to get ahead financially.

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