Maxing Out Your 401(k) Will Get Harder in 2026. Maybe You Shouldn't Do It.

A workplace 401(k) is an important retirement investment account. If you have access to one at your job, there are some big benefits to investing in this type of plan.

There are rules related to 401(k) investing that every worker needs to know about, though, and those rules are changing in 2026. Specifically, it is going to get harder to max out this account. Since many people are already not contributing the maximum, this news may have some workers wondering what they should do.

Surprisingly, the answer may not be what you think it is. The answer may be that you simply should not even try to max out your 401(k). Here's why.

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Why is it getting harder to max out your 401(k)?

First things first. The reason that it is going to be harder to max out your 401(k) account in 2026 is that the contribution limit is going up.

While the IRS normally announces the new retirement account contribution numbers for the following year on Nov. 1, the government shutdown has delayed this process. But multiple projections suggest that the 2026 contribution limit for 401(k) plans will increase to $24,500, up from $23,500 in 2025. The catch-up contribution limit is also expected to rise from $7,500 to $8,000, based on multiple projections.

Employees ages 60 to 63 are also entitled to a special catch-up contribution, which was $11,250 in 2025. Some experts predict this will increase to $12,000 next year, but others believe it will stay the same.

Regardless of whether these specific numbers pan out or not, the reality is that the IRS does increase the allowable contribution amounts in most years to account for the effects of inflation. So, if your goal is to max out your account, you'll have to increase the amount you invest during most years.

For some people, this is a good thing because it allows them to make more tax-advantaged contributions to a retirement plan. For others, however, it could be a source of stress as they get further away from maxing out their 401(k) or feel pressured to adjust their retirement planning to put more money into their account so they don't miss out.

Why you may not want to max out your 401(k)

If you're not sure you can max out your 401(k) in 2026 as the limits increase, it may be time to take a pause and ask yourself whether putting so much money into this account even makes sense.

Of course, if you have access to an employer match, you absolutely want to do everything possible to invest enough in your 401(k) that you earn the full match. Otherwise, you are leaving free money on the table for no reason. But, for most people, the employer matching amount is far lower than the maximum allowable 401(k) contribution for the year.

Once you have earned your full 401(k) match, it may actually not make sense for you to start funneling even more money into your workplace plan. That's because chances are good you don't have unlimited funds to invest for the future, and there are other accounts out there that are just as worthy -- if not more worthy -- of your retirement savings dollars.

Instead of putting more money into a 401(k), for example, it could make good sense to put some into an IRA instead. This would provide the same tax breaks as a 401(k) does (albeit with a smaller contribution limit). But you will have access to many more investments with an IRA and have control over what brokerage account you put your money into.

On the other hand, you could also put some money into a Roth IRA to gain access to deferred tax breaks that come as a retiree instead of the up-front tax savings a traditional IRA provides. If you think your tax bracket will be higher in retirement or are worried your Social Security benefits are going to be taxed, this could be a smart move.

The reality is that 401(k)s aren't always the best accounts due to limits on what you can invest in and, unless your employer offers a Roth 401(k), limits on the kind of tax benefits you get. So, as the contribution limit goes up and it takes even more of your hard-earned money to max out your 401(k), pause instead and take the time to really research whether other accounts could be a better place for any retirement funds you have left after you earn your match.

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