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FlowTexShould You Increase Your 401(k) Contributions Before Year End?
By FlowTex Accounting · October 27, 2026
If your employer offers a 401(k), the last few paychecks of the year are your final chance to adjust how much goes in for 2026. Here is what to know before you change anything.
The 2026 limits
| What | 2026 limit |
|---|---|
| Employee contributions (pre-tax and Roth combined) | $24,500 |
| Catch-up, age 50 and over | $8,000 |
| Catch-up, ages 60 to 63 | $11,250 |
| Total of employee and employer contributions (not counting catch-up) | $72,000 |
| IRA contribution | $7,500 |
| SIMPLE IRA employee contribution | $17,000 |
So a worker 50 or older can put in up to $32,500, or $35,750 if they are 60 through 63.
New Roth catch-up rule
Starting in 2026, if your wages from the employer that sponsors the plan were above $150,000 in the prior year, your catch-up contributions must be made as Roth contributions. If your plan has no Roth option, you can’t make catch-up contributions at all. Ask your plan administrator how the rule applies to you.
Pre-tax or Roth?
- Pre-tax: Lowers your taxable income now. You pay tax when you withdraw. The contributions are still subject to Social Security and Medicare tax.
- Roth: No tax break today, but qualified withdrawals, including earnings, come out tax-free. It can also be a good fit if your income is too high to contribute directly to a Roth IRA.
If you expect to be in a lower bracket in retirement, pre-tax usually wins. If you expect a higher one, or want tax-free income later, consider Roth. Many people split between the two.
Three questions to ask before year end
- Am I getting the full employer match? It’s the closest thing to free money in your finances. Some plans calculate the match every pay period, others true it up at year end, so the timing of your contributions can change what you receive.
- How many paychecks are left? Contributions for 2026 generally have to come out of payroll by December 31. Payroll processing cutoffs may be earlier than you expect, so ask now.
- Can I live without this money? Withdrawals before age 59½ usually bring a 10% penalty on top of income tax, with limited exceptions. Don’t lock up money you may need for an emergency.
A tax bonus
Pre-tax contributions also reduce your adjusted gross income. That can help you qualify for tax breaks that phase out as income rises. It’s one more reason to look at your contributions alongside the rest of your year-end checklist.
Self-employed or running your own business?
Solo 401(k) and SEP rules have different deadlines and limits. Book a call to ask about your situation.
Sources
This article is general information, not tax, legal, or investment advice. Plan rules vary by employer. Talk to a qualified professional before changing your contributions.