Big Changes to 401(k) and IRA Rules: What You Need to Know 

Retirement planning is one of the most important steps you can take for your financial future, but the rules around retirement accounts don’t stay the same forever. Retirement plans have seen several important changes over the past few years, and more updates are still coming. Understanding when these changes take effect can help you make smarter decisions about saving, taxes, and planning for the future.  If you’ve been wondering what’s new and how it affects you, let’s break it down in more detail.

Starting in 2026, contribution limits for workplace retirement plans will increase.  For 401(k) 403(b), and most 457 plans, you can now save up to $24,500 per year, and if you’re age 50 or older, you can add an extra $8,000 in catch-up contributions. That means you could put away as much as $32,500 in one year.  For individuals aged 60 to 63, there’s a new “super catch-up” allowing a contribution of $11,250 for a total employee contribution of $35,750. This special provision gives those nearing retirement an even bigger opportunity to boost savings during their peak earning years.  Also in 2026, a rule delayed from SECURE 2.0 will take effect: if you earned $150,000 or more in the previous year, any age-50+ catch-up contributions must be made as Roth contributions. That means you’ll pay taxes now, but withdrawals in retirement will be tax-free. If you are employee subject to this new provision, you should confirm with your HR department that a Roth funding feature is available within your retirement plan.  

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For Traditional and Roth IRAs, the annual limit for 2026 is now $7,500, with an additional $1,100 catch-up for those 50 and older. These higher limits give you more room to grow your retirement savings and take advantage of tax benefits.

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With contribution limits increasing, it’s also important to understand another rule that could affect your retirement savings strategy, especially if you’re changing jobs. Automatic enrollment, introduced in 2025, requires many employers to automatically enroll eligible employees in their retirement plan.  Typically, the contribution rate starts at or around 3% and gradually increases each year. This is meant to help people start saving without having to take action.  If you change jobs or join a new plan, don’t assume the default settings are right for you. Review your contribution amount and investment choices to make sure they fit your goals.

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Starting in 2024, employers were given the ability to match student loan payments the same way they match contributions to your 401(k). In other words, if you’re paying down student debt and can’t afford to put money into your retirement plan, your employer can still add money to your 401(k) based on what you pay toward your loans.  The IRS provided more detailed guidance in late 2024, and as a result, some employers delayed implementation until they had clear instructions, rolling out the benefit in 2025 or even introducing it as a new feature in 2026.  If you have student loans, ask your HR team if this option is available and what steps you need to take—usually, you’ll need to confirm your loan payments. This is a great way to make progress on two goals at once: paying off debt and saving for retirement.

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Another benefit introduced in 2024 allows employees to set up a small emergency savings account within their retirement plan. Depending on your employer’s plan, you can contribute up to $2,500 per year with the emergency savings account itself having a maximum balance of $2,500. Withdrawals may be penalty-free, giving you a way to cover unexpected expenses without dipping into your main retirement savings.

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Over the past decade, the age for required minimum distributions (RMDs)—the point when retirees must begin withdrawing from their retirement accounts—has changed several times. For many years, the starting age was 70½. It increased to 72 in 2020, then to 73 beginning in 2023, and it will rise again to 75 starting in 2033. These changes provide retirees with greater flexibility to keep their savings invested longer and manage taxes more strategically. If you were born between 1951 and 1959, your RMD age is 73. If you were born in 1960 or later, you will begin distributions at 75.

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So what does all this mean for you? If you’re an employee, review your contribution levels, check if your plan offers Roth and emergency savings options, and ask about student loan matching if you have debt. If you’re an employer, make sure your plan complies with new rules, consider adding features like emergency savings and student loan matching, and educate your team about these changes.  

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These updates are designed to make saving for retirement easier and more flexible, but they only help if you take advantage of them. Whether you’re just starting out or nearing retirement, understanding these changes can help you make smarter decisions. If you’re unsure how these updates affect you, reach out—we’ll help you create a plan that fits your goals and makes the most of these new opportunities.

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