This 2026 401(k) Change Offers Savers a Huge Hidden Benefit

Some workers 50 and older are facing bigger tax bills this year thanks to a recent 401(k) change. Those earning $150,000 or more are now required to make Roth 401(k) catch-up contributions after exceeding the $24,500 standard contribution limit for adults under 50.

This is frustrating for those trying to keep their present tax bills as low as possible. However, there is a hidden upside waiting in retirement.

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Retirement taxes could be a lot more manageable

Traditional 401(k) contributions are valuable when you're a high earner because they give you an upfront tax break. However, you have to pay taxes on your withdrawals from this account when you make them.

Roth accounts work the other way. There's no upfront tax break, but you're allowed tax-free withdrawals as long as you're at least 59 1/2 and have had a Roth account for at least five years.

So while mandatory Roth contributions may lead to bigger tax bills during your career, you'll enjoy greater control over your retirement tax bill. If you find you're nearing the top of your tax bracket one year, you'll be able to rely more heavily upon those Roth savings to avoid jumping up to the next tax bracket.

The high catch-up contribution limits mean you'll be able to stockpile plenty of Roth savings this year if your income allows it. Those aged 50 to 59 and 64 or older can save an extra $8,000 beyond the standard contribution limit, while those aged 60 to 63 by year's end can save up to $11,250 beyond the standard limit.

If you have any questions about how making more Roth contributions will affect your 2026 taxes, it's best to work with an accountant who can give you personalized advice on how to prepare.

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