Retirement Retirement Planning

50 or Older? Forgetting About This 2026 401(k) Rule Change Could Cost You Big-Time

Many workers still aren't aware of this update.

By Catherine Collins , Edited by Laura Hohenstein

Updated Sept. 30, 2026

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In early 2026, there was a major 401(k) rule change, and many people still don't know about it. This update affects workers who are aged 50 or older, especially high earners who regularly contribute to their 401(k) retirement plans in an effort to lower their taxable income.

Here is everything you need to know about this big 401(k) plan update and why it's important, especially at tax time.

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These changes come from the SECURE 2.0 Act

The SECURE 2.0 Act became a law back in 2022. However, this law included several changes that slowly rolled out over the past few years.

Many of these changes affected 401(k) plans, including increasing the minimum distribution (RMD) age requirement and improving the percentage of businesses that offer 401(k) automatic enrollment. The SECURE 2.0 Act also increased 401(k) contribution limits.

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New rules on catch-up contributions for high earners

One rule many people don't know about applies to workers who earn more than $150,000 a year. Previously, these workers could use their catch-up contributions as a way to lower their taxable income once they turned 50.

However, with the new changes from the SECURE 2.0 Act, workers who make above $150,000 a year must make their catch-up contributions as Roth contributions. When contributions are made in Roth accounts with after-tax income, these workers cannot use their contributions to lower their income. That may mean these workers have a higher tax bill than in previous years.

How to know whether this new rule applies to you

If you're not sure whether you are at the $150,000-a-year threshold, it's important to know this refers to your individual income, not your household income. So if you don't make $150,000 a year in W-2 income, but your household does once you add in your spouse's income, this rule still doesn't apply to you.

If you are close to the threshold and want to make sure you are following all tax guidelines, double-check with an accountant or your human resources department to confirm you are following them correctly. Keep in mind that not every employer offers a Roth 401(k) option. If they don't, you may not be able to make catch-up contributions as a high-earner.

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Other new rules can affect retirement planning

The high-earner Roth policy change was not the only update that affects 401(k) plans. For example, the SECURE 2.0 Act mandated that in 2033 the RMD age will be raised to 75. That gives workers several more years of benefiting from compound interest before they will be required to make withdrawals.

Other types of retirement accounts to consider

If you're in your 50s, and you only have a 401(k), it may be time to consider opening other types of retirement accounts. This is especially important if your workplace does not offer Roth 401(k)s.

Other options include Roth IRAs, Traditional IRAs, and even HSAs. These different retirement accounts all have their own sets of rules, requirements, contribution limits, and benefits.

How some of these 401(k) changes could help older workers

There are several positive outcomes from these 401(k) changes. For example, because the SECURE Act updated employee contribution limits, workers who are 50 and older can now contribute an extra $8,000 to their 401(k)s. This is $8,000 in addition to the $24,500 maximum contribution limit.

Additionally, even though workers may not be able to take advantage of reducing their taxable income due to the new Roth rules, the benefit of a Roth IRA is that workers can withdraw the money tax-free in retirement.

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Work with a financial planner if you need retirement help

If you're a worker in your 50s, and you're not sure whether or not you're on track for retirement, the best next step may be making an appointment with a financial planner. A financial planner can look at your retirement account balances, make sure that you are contributing enough to your accounts, and help you optimize your taxes.

A financial planner can also project your income in retirement and let you know whether or not you can meet your retirement goals and retire at a specific age. Even though your 50s are close to retirement, there's still enough of a runway to take advantage of compound interest before retirement age.

Bottom line

Ultimately, your 50s are an important time in your financial life. Even if you've made financial mistakes in the past, your 50s are some of your highest earning years. Plus, there is still a good opportunity to top up your retirement accounts by taking advantage of catch-up contributions.

If you want to make sure you're on track to retire in your 60s, consider taking the steps necessary now to set yourself up for success in the future.

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