As 2026 comes to a close, now is a great time to review your 401(k) contributions. Making adjustments before December 31 could help reduce your taxable income, increase your retirement savings, and take full advantage of employer matching contributions.
Understanding Your 401(k) Tax Benefits
A traditional 401(k) allows you to contribute a portion of your paycheck before federal income taxes, potentially lowering your taxable income for 2026. Your investments grow tax-deferred until you make withdrawals during retirement.
If your employer offers a Roth 401(k), you can contribute after-tax dollars instead. While Roth contributions won’t reduce your current taxes, qualified withdrawals in retirement are tax-free.
2026 401(k) Contribution Limits
The IRS has increased contribution limits for 2026, providing additional opportunities to save for retirement.
| Age | Maximum 2026 Contribution |
|---|---|
| Under 50 | $24,500 |
| Ages 50–59 and 64+ | $32,500 |
| Ages 60–63 | $35,750 |
These limits include applicable catch-up contributions, provided your employer’s plan allows them.
Important update for 2026: If your 2025 wages from your employer exceeded $150,000, any eligible catch-up contributions in 2026 generally must be made as Roth contributions.
Smart 401(k) Moves Before December 31
Consider these strategies to make the most of your retirement savings:
- Increase contributions: If you haven’t reached the annual limit, consider contributing more from your remaining paychecks.
- Maximize your employer match: Contribute enough to receive your full employer matching benefit.
- Review your investments: Make sure your investment selections still align with your retirement goals.
- Evaluate Roth vs. traditional contributions: Determine which option best supports your current and future tax situation.
Remember, employee 401(k) contributions generally must be made through payroll by December 31, 2026. Check with your employer about any earlier payroll deadlines.
Make the Most of Your Year-End Tax Planning
Increasing your 401(k) contributions before year-end could provide valuable tax savings while helping you build a stronger financial future.
Hare CPAs is here to help! Our team can evaluate your tax situation, explain your retirement contribution options, and help you make informed year-end financial decisions.
Contact Hare CPAs today to discuss your 2026 tax planning opportunities.
