The SECURE Act 2.0 and Your Retirement: Key 401(k) Updates for 2026

2026 is here, and with the new year came a few new rules when it comes to retirement planning. Namely, the SECURE Act 2.0 prompted some 401(k) changes that could affect you. How might your current retirement plan be impacted?

Some updates are good, and others are less so. Here’s a quick breakdown of SECURE 2.0 changes, updated contribution rates, and other changes you can expect to hear from your financial advisor this year.

The “High Earner” Roth Catch-Up Mandate

Are you age 50+ and earning more than $150,000 a year?

Starting January 1, 2026, if you earn more than $150,000 in FICA wages from your employer in the previous year (2025), you are no longer allowed to make pre-tax catch-up contributions.

In years past, you were able to choose between traditional and Roth contributions—but no more. Now, your catch-up contributions must be made as Roth contributions.

However, losing the option does not necessarily mean you’re losing the benefit of your 401(k) contributions. Roth contributions are taxed now, but are tax-free upon withdrawal in your golden years.

So, what’s the point? The government effectively wants its tax revenue sooner. By forcing high earners to use Roth for these specific contributions, they collect income tax today rather than waiting 10-20 years for you to withdraw the money.

If you’re familiar with the Mega Backdoor Roth, this new rule effectively forces a “mini” Mega Backdoor outcome on your catch-up money. You’re putting money into your 401(k) that has already been taxed, which will then grow tax-free. The government is essentially mandating that you use “Roth logic” for this specific slice of your savings.

The "No Roth, No Catch-Up" Trap

There’s just one major trap to watch out for with the new rule.

The law says high earners must do Roth catch-ups. But if your employer does not offer a Roth plan option, you’re trapped. You’re entirely unable to make a catch-up contribution.

If you work for a major tech company like Google, Meta, Microsoft, or Amazon, you don’t need to worry. All four of these companies offer Roth 401(k) options, so you’ll still be able to make catch-up contributions in 2026. You just won’t be able to change the tax classification of those contributions. 

Other Changes for 2026

While these changes to catch-up contributions are the main update from the SECURE Act 2.0, 2026 introduced a few other adjustments to keep in mind. Here’s what you can anticipate.

New 401(k) and IRA Contribution Limits

The contribution limits for IRA and 401(k) plans have been increased for 2026. The increase is fairly modest, but every penny counts when planning for retirement. 

For 2026, the 401(k) contribution limit is now at $24,500. This is up by $1,000 from the previous year! Additionally, catch-up contributions have increased by $500 for those ages 50 to 59 and 64+ to $8,000, for a total of $32,500. Those 60-63 have a special catch-up of $11,250 (no change from 2025), meaning they can contribute up to $35,750.

IRAs will also see increased contribution limits this year. Both traditional and Roth IRAs now have a $7,500 annual contribution limit. Catch-up contributions increased from $1,000 to $1,100.

Long-Term Care (LTC) Premium Withdrawals

One of the scariest prospects of aging is wondering how you would afford long-term care if you were to need it. You can spend decades saving for your golden years, but can you afford a medical emergency that renders you incapable of caring for yourself?

Now, you can take penalty-free withdrawals from your 401(k) (up to $2,600 each year) to cover the cost of long-term care insurance to help offset the burden of preparing for the unthinkable.

One thing to note is that these penalty-free withdrawals are still taxed as ordinary income for pre-tax dollars, even if they are not hit with the early withdrawal penalty. Not to mention, not every plan sponsor will support this function. Be sure to read the fine print on your employer’s plan.

Surviving Spouse RMD Elections

Inheriting a retirement savings account can provide some financial cushion to surviving spouses. However, considering all aspects of required minimum distributions can be complex. Under the SECURE 2.0 framework, spouses can elect to be treated as their spouse (the deceased employee).

What is the benefit of this?

The spouse can defer those RMDs until the year their spouse would have reached the magical age at which RMDs are required. They can take smaller RMDs using the Uniform Life Table and avoid early withdrawal penalties for withdrawing funds from a retirement account before age 59 ½.

These RMD elections are most useful if your spouse passes before age 73 (typically the RMD age). Be sure to look into their plan’s rules to see what options a surviving spouse may have.

Plan for Your Future with Consilio

During the golden years of a life well-lived, you deserve to relax, spend time with family, and enjoy the fruits of your labor. 

The only problem: The rules around saving for retirement keep changing. In order to plan your retirement with confidence, you need a way to stay up-to-date with the latest changes and pivot your plan accordingly. 

Don’t let the numbers leave you paralyzed when it comes to long-term strategic planning. Consilio Wealth Advisors offers fiduciary and wealth planning services primarily to tech professionals. You have a unique compensation package, and Consilio can help you make the most of it.

Reach out today and book an appointment with our experienced team!

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