Retirement Retirement Planning

5 Major 401(k) Changes Coming in 2026 That Every American Needs to Know About

Employees will benefit from higher 401(k) contribution limits and other changes in 2026.

By Catherine Collins

Edited by Laura Hohenstein

Updated Dec. 23, 2025

A fresh new year is upon us, and 2026 brings with it five major changes to 401(k) retirement plans. These changes will impact millions of Americans, mainly for the better. These updates are a result of the Secure 2.0 Act, which is a law President Biden signed in 2022 in an effort to expand 401(k) participation.

The Secure 2.0 Act made important changes to 401(k)s, but it's been on a slow rollout with many of the updates taking effect starting January 1, 2026.

Here are some of the major changes coming in 2026, what you need to know about them, and how to prepare so you can get the maximum benefits from these updates.

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Increased contribution limits

In 2026, employees can contribute even more to their 401(k) savings. The employee deferral limit has increased by $1,000 from $23,500 to $24,500. Additionally, if you are age 50 or older, you can now contribute $8,000 in additional contributions in 2026.

One way to benefit from these higher contribution limits without feeling the impact is to increase your contribution limits every time you get a pay raise. By living on the same amount but contributing more to retirement, you can accelerate your retirement goals.

Age 60-63 catch-up contributions

If you're age 60-63, you'll be able to make even larger catch-up contributions than those who are age 50-60. This amount, $11,250, actually remains the same as in 2025. However, because of the larger standard contribution limit of $24,500, investors aged 60-63 can make a total contribution of $35,750 in 2026.

These contributions can be especially helpful for those who started investing late or who had an adverse financial event earlier in life that led them to withdraw money early from their 401(k).

Roth only changes for high-income earners

Perhaps the biggest 401(k) change will affect those who are age 50 or older and earned more than $145,000 the previous year. In 2025, investors could make catch-up contributions on a pre-tax basis, which could help them get an upfront tax break.

However, now, catch-up contributions for people in this age range and income bracket must be made as a Roth in 2026. While many employees might be disappointed with this change, the benefit is that they can withdraw Roth contributions tax-free during retirement, so long as they meet certain requirements.

Automatic enrollment becomes widespread

The Secure 2.0 Act mandated that, in general, new 401(k) plans must have automatic enrollment starting January 1, 2025. However, this change may become more noticeable in 2026 because employers might roll out new plans, change contribution rates, or hire new employees.

As an important note, even though employees will now be automatically enrolled in a 401(k) plan, they can still opt out if they choose.

Part-time employees get more access

The Secure 2.0 Act also improves eligibility for part-time workers. Starting in 2025, employees who work at least 500 hours a year for two years in a row can make 401(k) deferrals. Previously, the rule was that part-time employees had to work for three years.

This makes 401(k) plans more inclusive for those who have flexible roles or who work part-time due to caring for their children after school.

How contributions affect take-home pay

Many of the changes listed above are designed to encourage more people to enroll in 401(k) plans and increase contributions. However, contributing more to a 401(k) plan can sometimes mean less take-home pay, even though you might be getting certain tax benefits.

If you want to contribute more but you're concerned about having a smaller paycheck, do a thorough review of your spending habits and bills. There may be an opportunity to be more mindful about spending now so your future self can enjoy a fruitful retirement.

How to prepare for 2026 401(k) changes

To prepare for the 2026 401(k) changes, all employees should review their plan offers. Make sure that you're enrolled for automatic enrollment and automatic escalation if available. Reassess your contribution rates and check with your employer to see if there have been any new changes to your match rate, vesting limits, and more. If you're unsure what to do, you can also consult a financial advisor who can help you understand the changes and how they affect your personal retirement goals.

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Bottom line

The 2026 401(k) changes are among the biggest updates to 401(k) plans in years. For some, the changes will be a benefit, helping them retire comfortably. For high earners, it will likely change their taxes. Employees should keep in mind that some employers might encounter administrative hurdles when implementing the new aspects of 401(k) plans in 2026. So, it's important to check with your HR department and stay proactive to ensure that all changes are actually implemented.

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