As of Jan. 1, the SECURE Act 2.0 requires changes to how you can save for your retirement. These changes impact those saving in 401(k), 403(b), as well as 457(b) plans. Let’s explore who is affected and how.

Who?

If you are 50 years of age or older in 2026 and are considered a highly paid individual (HPI), there are new rules for you this year. HPIs are defined as an employee whose FICA wages (box 3 of Form W-2) from 2025 exceeded $150,000.

What’s Changed?

For the sake of brevity, this article will focus on 401(k) plans. Changes for 2026 include the amount you can defer from your wages into a qualified retirement plan as well as how those deferrals need to be characterized. For details, you are encouraged to visit www.irs.gov/retirement-plans. In the interim, here are highlights of key changes for this year.

• All wage-earners in 2026 are allowed to defer up to $24,500. This is up from the base deferral maximum of $23,500 allowed in 2025. These deferrals can be made either in a Traditional 401(k) account (pre-tax) or in a Roth (after-tax).
• During this year, if you are age 50 years or greater, you are eligible to save even more in your 401(k) by taking advantage of a Catch-Up provision. The Catch-Up amount increased from $7,500 in 2025 to $8,000 in 2026. There is a new condition, however. Catch-Up deferrals in 2026 must be in the form of a Roth, which means they are after-tax contributions to your plan.
• But wait, there’s more! There is a quirky, narrow Super Catch-Up for those who are ages 60 to 63 years old in 2026. If you are lucky enough to fall into this category, in 2026 you are allowed to defer up $11,250 in addition to your base deferral. The Super Catch-Up deferral portion of your retirement savings in 2026 does need to be in a Roth.

Be Strategic

Now that you are aware of the new ground rules for 2026, the next recommended step is to meet with your wealth manager and your tax consultant to customize your action plan. For Illinois residents, the fact that distributions out of retirement plans have special state tax treatment should be factored into your approach. If your current advisors are not attuned to this, or if you are seeking another opinion, give our team a call – we’d be happy to help.

This material is intended for informational purposes only and should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney, tax advisor, or plan provider. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Tom McCartney and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members.