The IRS will enforce a rule in 2026 requiring high-income 401(k) savers aged 50 or older to make catch-up contributions in Roth accounts. Financial advisors have less than two months to help clients decide on this change. Traditional 401(k) catch-up contributions above the income threshold will no longer be available.

Industry groups have pushed for an extended transitional period to allow time for technical changes. 401(k) sponsors and advisors need to work together to educate higher-earning participants about the new guidelines. Employers need to coordinate with payroll companies and recordkeepers to ensure compliance with the new rules for 2026.

Savers aged 50 or older earning more than $145,000 in 2025 may not get catch-ups in 2026 without a Roth 401(k) option. Vanguard’s report shows only 18% of workers utilized a Roth 401(k) last year. Traditional 401(k) participants face taxes upon withdrawal, while Roth 401(k) holders have no required distributions at any age.

Experts predict contribution limits will increase in 2026 due to inflation, but exact figures are not released yet. Small business owners with multiple companies can decide whether to combine wages and contributions across employers. High earners have incentives to start a Roth 401(k) account at the beginning of 2026 for longer earnings growth.

Read more at Yahoo Finance: How 401(k) catch-ups are changing in 2026