Matt: If you are saving for retirement, which hopefully is everybody, 2026 brings some big changes you're going to want to know about, especially when it comes to Roth accounts and catch-up contributions.
This morning in Matt on the Money, we are breaking down what is changing and how to make sure you are still maximizing your savings.
We've got Dan Bennett with Lakewater Advisory back with us this morning. Dan, welcome back. Good to have you here.
Dan: Good to be back.
Matt: So, I want to start with kind of the big headline here. What are the most important changes coming in 2026 for retirement contributions?
Dan: 401(k) contributions have now increased. 401(k)s, IRAs, and HSAs are kind of the big three. Previously, the contribution limit was $23,500 for those under age 50.
Matt: Let's get the graphic on our screen so we can show our viewers those limits. So now we're up to what?
Dan: $24,500 now if you're under the age of 50. An additional $8,000 a year if you're over the age of 50.
Then there's the $11,250 super catch-up contribution. This is new. If you're between the ages of 60 and 63, you can still make the maximum contribution of $24,500 plus the $11,250.
Matt: Okay. And then for viewers at home, let me get to the backdoor Roth because the mega backdoor Roth is kind of a big one. We hear a lot about that in the finance space.
In plain English, what is the mega backdoor Roth? Who can actually use it?
Dan: Mega backdoor Roth sounds like a marketing gimmick, but it's a real thing.
Matt: It sounds like it could be a gray area, right? But it's not.
Dan: No, it's not. You have your maximum contribution that you can make. There are three ways to contribute to your 401(k):
There are also employer contributions, such as matching contributions or profit sharing.
The way this works is that you can contribute beyond your standard employee contribution limit through after-tax contributions.
Let's say for you super savers out there, you're maxing out your 401(k) contribution at $24,500 and you're under the age of 50.
Let's say you also receive an employer match. The maximum amount that can be contributed to a 401(k), including both employee and employer contributions, is $72,000.
That leaves a large difference that can potentially be contributed through what's called a mega backdoor Roth contribution.
Matt: A lot of employers are going to have a cap on how much you can put in. Is that right? The $72,000 is the IRS limit, but your employer may have a different amount that you can contribute.
Dan: Correct. Every plan is a little bit different. You just want to make sure your plan allows for after-tax contributions.
If you're in those higher income brackets and you're saving a significant amount of money, this may be a way to put additional after-tax money to work.
Matt: To go back to the catch-up contributions for a second, one thing that's getting a lot of attention is that catch-up contributions will now have to go into a Roth account for higher earners.
Who does that apply to, and why is that a big deal?
Dan: If you're making catch-up contributions and you're over the age of 50, and if you earned more than $150,000 during the previous year, your catch-up contributions now have to be made as Roth contributions.
In order for you to do that, your plan has to allow for Roth contributions.
If it doesn't, you cannot make a catch-up contribution at all.
Matt: Wow. So for some people, that could mean catch-up contributions effectively going away if the Roth option isn't available.
You want to make sure you talk to your plan administrator or employer and confirm that Roth contributions are available in your plan.
Quickly before we go, for viewers at home, what's one thing they should check right now in their workplace plan to make sure they're ready for these new 2026 rules?
Dan: I think it's that one point right there. Make sure through your plan administrator that you can make Roth contributions.
If you're age 50 or older and you want to make those catch-up contributions, you just want to make sure your plan offers that option.
Matt: Okay. It's a lot to think about. Really important stuff. If you want to keep more of your money working for you, Dan, thanks.
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