Workers age 50 and older may generally be eligible for additional retirement-plan catch-up contributions in 2026, if their plan allows. The standard employee 401(k) deferral limit is $24,500, while the general age-50+ catch-up limit is $8,000. Employees ages 60 through 63 may qualify for a higher $11,250 catch-up limit. New Roth catch-up requirements also apply to certain higher-paid workers. (IRS)
What Are the 401(k) Contribution Limits for 2026?
For 2026, the employee elective-deferral limit for most traditional and safe-harbor 401(k) plans is $24,500.
Employees who are age 50 or older by the end of the calendar year may generally be eligible for an additional $8,000 catch-up contribution, if their plan permits catch-up contributions.
That creates a potential employee deferral amount of $32,500 for many eligible participants age 50 and older.
Different rules apply to certain plans, including SIMPLE plans. (IRS)
What Is Different for Ages 60 Through 63?
SECURE 2.0 created a higher catch-up limit for workers who reach ages 60, 61, 62, or 63 during the calendar year.
For 2026, that higher catch-up limit is $11,250 for applicable plans. (IRS)
That can make age particularly important in retirement-plan contribution planning.
Someone aged 59, 60, and 64 can face different catch-up limits even if their compensation is otherwise identical.
What Is the New Roth Catch-Up Rule in 2026?
Another significant change takes effect in 2026.
Participants in applicable plans with Roth features who are eligible to make catch-up contributions generally must make those catch-up contributions on a Roth basis if their prior-year wages from the employer sponsoring the plan exceeded $150,000 for the applicable 2026 rule. (IRS)
This wording matters.
The threshold is not simply:
“Anyone whose household income exceeds $150,000.”
It generally looks to applicable prior-year wages from the plan sponsor.
Other investment income, a spouse’s earnings, or unrelated business income does not automatically determine whether the employee crosses this particular threshold.
Why Does the Roth Requirement Matter?
Traditional pre-tax contributions and Roth contributions generally have different current-tax consequences.
A traditional 401(k) salary deferral generally reduces current taxable wages for federal income-tax purposes, subject to applicable rules.
A Roth 401(k) contribution is made after tax.
For an affected high-wage employee, requiring catch-up dollars to go into the Roth side may therefore change assumptions about:
- Current taxable income
- Take-home pay
- Retirement-account tax diversification
- Year-end tax projections
This does not mean Roth contributions are inherently better or worse.
It means the rules surrounding how catch-up dollars are contributed have changed for certain workers.
How Do RSUs Affect This Conversation?
RSUs can materially increase annual compensation.
When RSUs vest, their value is generally treated as taxable compensation.
For someone trying to coordinate retirement contributions, an equity-heavy year can therefore involve several moving pieces:
- Larger taxable wages
- More supplemental withholding
- Potential estimated-tax considerations
- Retirement contributions
- Shares accumulated after vesting
- Investment concentration
The retirement-plan election should therefore not necessarily be reviewed independently of equity compensation.
What About Bonuses?
Bonuses can create a similar cash-flow issue.
An employee may intend to increase 401(k) contributions late in the year but also need cash from a bonus for taxes, spending, or other financial goals.
Plan rules also matter.
Some employers allow retirement contributions from bonuses. Others calculate contributions differently or impose payroll timing requirements.
Employees should verify their employer’s plan terms before assuming a specific bonus can be directed into the plan.
Why Should High Earners Review Contributions Before December?
Waiting until the final payroll of the year can create practical problems.
Contribution changes may take time to process, and an employee may have fewer remaining pay periods than expected.
A review may include:
- Year-to-date employee contributions
- Remaining 2026 contribution capacity
- Current age
- Eligibility for the age-50 catch-up
- Eligibility for the ages-60-through-63 catch-up
- Prior-year wages from the plan sponsor
- Whether the plan offers Roth contributions
- Expected RSU vesting
- Expected bonuses
- Cash-flow needs
- Current tax projection
Employer plans can impose additional limitations or administrative rules.
Should Someone Maximize the 401(k) Simply Because They Can?
Not necessarily.
Contribution limits define how much may be contributed under applicable rules. They do not determine what amount is appropriate for every household.
Cash reserves, debt, retirement goals, expected expenses, tax circumstances, investment allocation, and other factors may affect the decision.
The objective is not necessarily to maximize one account in isolation.
It is to determine how retirement saving fits into the broader financial plan.
How Does Falcon Wealth Planning Approach Retirement-Contribution Planning?
Falcon Wealth Planning is a Fee-Only fiduciary Registered Investment Adviser. Our CFP® professionals and CPAs work with clients to coordinate retirement savings with tax planning, investments, equity compensation, estate considerations, and cash flow.
For high-income employees receiving RSUs or bonuses, that may include evaluating contribution decisions alongside the rest of the compensation package.
Frequently Asked Questions
What is the 401(k) employee contribution limit for 2026?
The employee elective-deferral limit for most 401(k) plans is $24,500 in 2026.
What is the 2026 catch-up limit for someone over 50?
The general catch-up limit is $8,000 for eligible participants age 50 and older. A higher $11,250 limit applies to eligible participants ages 60 through 63.
Does every employee earning over $150,000 have to make catch-up contributions as Roth?
No. The 2026 rule generally looks to applicable prior-year FICA wages from the employer sponsoring the plan and other plan-related requirements.
Do RSUs count toward 401(k) contribution limits?
RSU compensation and retirement-plan contribution eligibility involve separate rules. Plan terms and compensation definitions should be reviewed to determine what compensation can support deferrals.
Schedule a No-Cost Financial Assessment
Retirement contributions can affect taxes, cash flow, and long-term investment planning at the same time. A No-Cost Financial Assessment can help determine whether Falcon Wealth Planning’s coordinated fee-only fiduciary approach may be appropriate for your family’s retirement and financial-planning needs.
