Retirement Roadmap

Major 2026 Changes to 401(k)s, IRAs, and Roth Strategies Explained

• Mark Fricks • Season 3 • Episode 31

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The retirement planning landscape is changing again in 2026—and for many savers, especially higher earners, the rules are becoming more complex.

In this episode of Retirement Roadmap, Evan and retirement planner Mark Fricks break down the most important 2026 changes affecting 401(k)s, IRAs, Roth accounts, and employer-sponsored plans. These updates create new opportunities to save more, but they also introduce new restrictions that could catch people off guard if they’re not prepared.

We cover:

  • New 2026 contribution limits for 401(k)s, 403(b)s, 457(b)s, and IRAs
  • Required Roth treatment for catch-up contributions for higher earners over age 50
  • What happens if your employer plan does not offer a Roth option
  • “Super” catch-up contributions for ages 60–63
  • Updated income phase-outs for Traditional and Roth IRAs
  • SIMPLE and SEP plan increases for small business owners
  • In-plan Roth conversions coming to the Thrift Savings Plan (TSP) for federal employees
  • Why these changes may signal a broader shift toward personal responsibility in retirement planning

We also discuss how concerns around Social Security, longer life expectancy, and future tax rates are shaping today’s retirement policy—and why having a coordinated plan matters more than ever.

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Advisory services offered through MasterPlan Retirement Consultants, Inc., a Registered Investment Advisor in the state of Georgia. Insurance, tax and commodities services offered through Fricks and Associates, Inc. dba MasterPlan Retirement Consultants. The aforementioned are affiliated companies.

SPEAKER_01:

Registered investment five circles. Mark First Investment Consultants are not affiliated with or endorsed by the Social Security Administration or any other government agency.

SPEAKER_02:

Is your retirement savings strategy ready for the coming changes in 2026? Hey folks, welcome back and thank you for joining us. Welcome to Retirement Roadmap. My name is Evan. With me, as always, retirement planner Mark Fricks. The coming 2026 changes to IRAs and 401ks offer new opportunities to save more for retirement. But in order to take advantage, you need to understand the new rules, such as higher contribution limits and updated requirements for withdrawing money from your accounts. Mark, this is a perfect example.

SPEAKER_03:

Every year there's something new that comes in, and even when they come in with a new act, like the Secure Act 2.0, is it didn't all start at once. You know, it said this year we're going to do this, and two years we're going to trigger that, and two more years will trigger that, but we're going to stop that. And so it's like a constant change over and over again. And if you're just, you know, if you're working with someone that that invests your money and chases some returns, that's fine, but you're missing out on a lot of opportunities, a lot of things that can make a big difference in your retirement, which is what we're going to talk about today, are some things that may be sneaking up on you that you weren't aware of. In fact, I was reading an article this morning I shared with you earlier that I had incorrect information in it. And I'm like, and it was on like a major news feed.

SPEAKER_00:

Yeah.

SPEAKER_03:

And I wanted to call the the writer and say, um, did AI write this or or where did this come from? And so Googling it may or may not help you. I don't know. There's a lot of misinformation out there.

SPEAKER_02:

Yeah, well, it's so, you know, I don't want to get down on the AI tangent right now, but you know, now if unless you disable it, your search engine on Google or where el wherever else, there's the AI answers first. And a lot of times you've got to scroll down to find the IRS website or other things that would have the actual information.

SPEAKER_03:

I had one the other day pop up, and that's all they showed was the AI. I could not get anything else to pop up. And I had to reload it, come back once or twice to uh get something else to appear. It's kind of strange.

SPEAKER_02:

Yeah, yeah. Well, we're gonna dive into this, and yeah, we're definitely gonna talk about contribution limit increases, things like that, a little bit about deductions, things like that, um the phase out stages, that's uh always a riveting conversation. Um but the first topic is actually a really interesting one. Um and I'm i I'm kind of curious where it came from, at least the ideas of where it came from. Um, and that is on the idea of catch-up contributions. So when you're 50 or older, um the IRS allows you to pay a little bit more into your retirement accounts to catch up on any missed time or as you get closer to retirement, so age 50 and older. So catch up 401k contributions for higher earners over 50 now must be made into a Roth.

SPEAKER_03:

Into a Roth, which first of all, I love the idea. Okay, it's kind of forcing people into a Roth, which you don't get a tax deduction this year, as we know, but you never pay taxes on that money again. Right. Um I don't know if I love the forcing part, but there's some weird caveats. And there's some caveats to it as well, which I think you're going to get into, right?

SPEAKER_02:

Yeah, absolutely. So um 10,000-foot view, the rule requires the certain hot that certain high-income earners must make uh make their age 50 and older catch-up contributions to their 401k, 403B, uh governmental 457B plans um on a Roth on an after-tax basis. So what this does is it eliminates um what could be a significant pre-tax deduction for higher earners nearing retirement. If they're putting more into that tax defer, then they can take that deduction um when they pay their taxes. But this is effectively requiring them to pay income tax on the catch-up portion for their savings now rather than in retirement, which in a micro lens of the year that might seem like a uh a raw deal, but we discuss this all the time in retirement planning. The more money you can put into a Roth that can grow tax-free and come out tax-free, even if you don't get that deduction, is gonna make a huge difference. And I'm assuming if you're a high income earner, you probably have, and you've been earning that for a while and putting money away in these tax-deferred vehicles, you already have a bit of a tax problem in the future.

SPEAKER_03:

I'm sure you already have a lot of traditional IRA 401k money as well, so that uh as you were uh alluding to. So um this is this will help you again, uh these higher contribution limits uh going into the Roth. Again, it's only for people that make a certain amount of money. Do you have that level? Is it 150? 150, yes, sir. 150,000. Um so this is the problem though, I think you're gonna be. Okay. So the year before, okay. Um but let's get into the other side of this. Yeah. Evan, my company doesn't offer a Roth in my 401k. What should I do?

SPEAKER_02:

Well, you are no longer allowed to make catch-up contributions. Um many 401ks these days we know offer Roths, but not all of them. Um and five years ago a lot of them didn't. Right. Um if your 401k does not offer a Roth option and you are 50 or older and you make too much money for that and to uh over 150, you can't make any catch-up contributions if the Roth's not available, which I think is Well, they're again they're forcing the hand of the employee to put, you know, to put more money into the Roth, which again I can't disagree with.

SPEAKER_03:

I just don't like government forcing me to do something, even if it's good for me. Yeah. Or presumed to be good for me, right? You know, so that's that's the one issue I have. Uh I would rather the government educate folks and say this is why you want to do this. But that's the only part of the bill I don't love. And is there an end date to that?

SPEAKER_02:

No, not currently. Or at least not one that I saw. Okay. Um it might be one of the classic permanent until someone changes it situations, but I'm not sure. Don't don't quote me on that. One of the things that um gets to me on this one and another another point later on another topic. Um, it's another situation where it feels like well, let me back up. We already know Social Security is in trouble. The trust fund side of Social Security is in trouble. Um there's something else that's gonna happen later where I'll talk a little bit more about how I feel like the government, kind of like corporations when they moved from pensions to 401ks, they took the responsibility off of themselves and put it on the individual.

SPEAKER_03:

Right.

SPEAKER_02:

We're starting to feel like this and a couple of other things, other changes, they are preemptively making some changes to cover some of the loss that might potentially happen with Social Security, this being one that could help people a little bit with tax burden in their retirement. Um we'll get into that a little bit later as well. But I can't help but have a little sneaking suspicion.

SPEAKER_03:

There's always this little thing on my shoulder saying, yeah, but Yeah. More responsibility on you, more responsibility on you. Which, you know, again, I believe in personal responsibility, but I also believe that if you're promised a Social Security payment, you should get that Social Security payment if you pay it in for the last 40 years or whatever it may be.

SPEAKER_02:

Aaron Ross Powell And if the system is broken, I'd rather fix it than just dole out responsibility elsewhere. But that's another conversation. Um just for quick information for you guys, so for affected high earners, the catch-up contributions,$8,000 in 2026, um which is$500 more than last year or this year, 2025,$7,500. So you can for your catch-up amount, you can put in an additional$8,000. Um and again, that's got to go into a Roth.

SPEAKER_03:

Do we still have the higher contribution limits for folks 60, 61, 62, and 63? Yeah. Okay. So make make sure folks understand that as well. So I assume if you're putting in that additional$3,000, give or take, it pushes it puts it up over$11,000, I believe. Yeah. Um that all of that has to go to the Roth if you made over$150,000 at$200. I didn't even look at that.

SPEAKER_02:

I wasn't even researching that part. I was looking at the blanket of what had been. I would have to be. Yeah, exactly. 100%. Um anything else here. Okay, number two. Um so our plan contributions are going up in 2026 for 41ks, 403Bs, 457s. Basically, pretty straightforward, our contribution limits are more, so we can put more in. Um and I can I'll run through the numbers uh briefly. Um, but the thing to consider here is I have a question for you, Mark. How many people do you know, whether clients or prospects who are currently working and have the opportunity to put money away into 401k or employer uh sponsored program, how many people are maximizing what they're putting away?

SPEAKER_03:

Um I wish I had a great number for you. Uh I know that of the folks we meet with, which tend to have a little bit more money because they come to an advisor because they have more money, typically, not always. Um many of them are, some of them are not. Um what's nice is is if you're under age 50, your your expenses are more. Yeah. Especially if you had children, uh if you um putting them through college, you had to buy them a car, they're on your car insurance, if you're there in private school all these years, when that last child leaves the nest, so to speak, um it's probably in the 50 to 55 year old range. Yeah. So you should have more money you can put away. Um and but but again, how many people are? I've you know, we've taught classes and we we'll bring up these contribution limits. And I'll have a couple of people go, yeah, I wish I could do that, or you know, whatever. So I don't know the percentage, but it certainly is not everyone.

SPEAKER_02:

Yeah, and that's again where the catch-up contributions really help out at 50. Um, that's what they're there for because we know in your 30s, 40s, um, anytime in that place you've got responsibilities, cost of living is higher, you're not making as much money, you have children, things like that. Um so we we see people as they're aging 10, 15 years from retirement, they're in a place that um is typically easier for them to maximize some of these retirement accounts. Even then, don't just assume that you'll be able to. There are certain disciplines you can practice and start early to work your way up to that, such as if you get a raise, only take half of it home and put the rest of it into your retirement account or things like that.

SPEAKER_03:

Yeah, and and and and go on some type of a budget. It doesn't have to be I'm gonna save every receipt, and when I get home, create a spreadsheet necessarily. Most folks won't do that. But at least maybe for a couple of months, just track what you're spending. You'll be s shocked as where some of your money's going. Uh also though, the you know, the good thing about the age 50 range, that typically is your top earning years as well. Yeah. Uh and a lot of times the you know, the other spouse that may have stayed home with children for a while, maybe they go back to work as well. So they're very they're bringing in money also. So maybe you've now, you know, maybe while the kids were, you know, instead of putting them in child care, one one spouse stayed home, took care of the children, at least part-time, maybe full-time. So many folks come in that meet with us where again one of the spouses just went back to work at age 45 or 50 to bring in that extra income to do the catch up. So it certainly is a it's a good idea to have that available. Uh but you're right. I don't know how many people are taking advantage of it. I don't know how many people can take advantage of it, but it's still there. And if you've got if you're making over 150,000, um, then you're probably making enough to maybe do some more catch up as well. Yeah.

SPEAKER_02:

So uh quick number run through the numbers here of just the changes. So uh the 2026 contribution limit is now twenty-four thousand five hundred, up a thousand dollars from last year. That's for employees under fifty. Uh the standard catch up for fifty or more is an additional eight thousand dollars. So the max contribution for folks under fifty is thirty-two thousand five hundred. Um and then age fifty. The super catch up is uh sixty five.

SPEAKER_03:

No, over age fifty, but not sixty, sixty-one, sixty-two.

SPEAKER_02:

Yes, fifty plus, excuse me.

SPEAKER_03:

That's okay. A lot of members float around. Yeah, yeah.

SPEAKER_02:

And and I'm looking at a graph and I can't even read it. Um super catch up is age sixty to sixty-three. It's eleven thousand two fifty. That has not changed. And then the max contribution, which would be all those numbers combined between age sixty and sixty-three, is thirty-five thousand seven fifty. Okay, so this is um where I first had this idea of the onus being taken off of the employer or government and put it on to us. So a Social Security uh trust fund is on shaky ground. Some experts recommend saving more to cover any potential shortfall, which is kind of what you're starting to see here. You keep increasing the limits, whether or not you can uh reach the limit. Um but how much more? So experts at the Pension B suggest people save an additional$138,000 and additional savings to generate the same income if Social Security is reduced based on the 4% withdrawal rule, which we've had conversations about how accurate that can be. Um I don't know. I just kind of see seeing preliminary writing on the wall on the wall, and I I am hopeful that things will get fixed. I'm not necessarily hopeful this year just with how messy things have been. But um yeah, we've got a little bit of time, but again, it's a hot potato, no one wants to be le held be holding the scalding vegetable as it were.

SPEAKER_03:

It also creates uh the need for a lot of folks to work longer than they thought. Right. Or part-time as they're retired. Um so it sh it can change people's plans just like 2008 did. We had so many folks back then that were getting ready to retire, and guess what? They had to delay it for three, four, five, six, eight years.

SPEAKER_02:

And it's probably gonna be a combination of these things that ends up being the the age will probably increase, especially for my age. The age will be pushed back, uh more responsibility on savings, and who knows where uh you know the taxes are probably gonna go up on that.

SPEAKER_03:

Well, and then you work longer because you're living longer. You'll live longer than I'm gonna live, you know, overall. Um and so how many years do you have to fund retirement? So it may but yet we're retiring earlier than ever. You know, used to it was like 65 was kind of a standard age. Now I think the average age is like 61, 62.

SPEAKER_00:

Yeah.

SPEAKER_03:

And so more people are retiring earlier, which is great, but now you're living longer as well.

SPEAKER_00:

Yeah.

SPEAKER_03:

Um and then, like I said, the next couple of generations, who knows what's going on uh from a standpoint of of lifespan. So it's just uh that much more that needs to be put away, uh, or either have a great relationship with your kids so you live in their basement. That's right.

SPEAKER_02:

Make sure it's finished. Um just one more thing on that. The simple without reading a ton of uh a ton more uh numbers and and boring everyone, um, simple and set contribution limits have also increased in 2026. So if you're a small business, self-employed, things like that, you have more opportunity to put more away as well.

SPEAKER_03:

You know what I would do, Evan? If I were listening to this podcast or radio show or YouTube, I would visit masterplanretire.com. That's a great idea. It is a great resource for uh virtually anything needed, whether it be all of these episodes are linked to that, uh all types of checklists, what are the 25 things I need to do before I retire? Uh there's a great checklist we don't like to mention just because we don't like to think about these things, but a survivor's checklist. You know, if you lose a loved one, what's what should you do the first week, uh, the first month, the first six things you don't think about, things you didn't even realize. Uh so all these checklists are available there. Uh you know what my favorite part is though? What's that? There's this little button, a little green button. I'm colorblind. Is it green? Uh it's it's a shade of green. Okay. Close enough. Sell it on. It says schedule a meeting. Uh and so you push that button and uh or choose that uh button. It will actually go to our calendar. And you will say, hey, you know, I've been listening to these guys. Uh I'm beginning to see that I have a lot of holes in my plans. Let's meet and let's see what the holes are and how deep the holes are. And those reports we run for you, complimentary, will reveal where what you need to work on, and then we can give you some ideas about what to do. Then you might say, Hey, I want to work with you guys, that'd be a great. Or you may walk away and say, Thanks for the info, that's great too. Uh, but take advantage of it. It it's um uh whether you're working with someone, you'll get a second opinion, or you don't feel like they're really doing retirement planning. Um check that out, masterplanretire.com. Uh, you can also give us a call, 770-980-9262. So hope to see you soon. Absolutely, thank you.

SPEAKER_02:

And you know, we're talking about a very small portion of the overall retirement plan. Um, but this is stuff that we discuss with our clients all the time. Like where should they be saving, where should they be maximizing? Is it all in their 401k or or maybe just get the match and then put the rest somewhere else? Again, it's different for everybody. It's got to fit your unique plan.

SPEAKER_03:

And today we're talking about gathering. You know, other point uh uh other uh uh event uh episodes will talk about the harvest. That's right. How do you take money out? Today it's about how do we save money, how can we maximize that's right. Uh yeah most efficiently.

SPEAKER_02:

So um something else that's changed, uh number three, uh was really great for our federal workers, and we've been saying this would be an excellent for years we've been saying it would be great if this option was available. And now January 2026, it will be TSP, the Thrift Savings Plan, which is the Government Workers 401k, is now offering in-plan Roth conversions starting January 26th.

SPEAKER_03:

That's big. And and then like you say, we've been asking for it for a long time. Uh so what this means, if you're a federal worker, you may want to pull over if you're driving, this is a big deal. Uh so the money that is in your traditional thrift savings plan, the per the pre-tax portion, you can actually just uh choose a button or form and transfer some of that money, whatever amount you want to, and there's no limit, by the way, uh, and move it to the Roth portion. The only action on your side, besides uh pushing that button, would be you do have to pay the taxes on that money that you transitioned over. It cannot be taken out of the TSP or uh uh traditional part or any of it. It has to be paid out of pocket. So if you're moving over$50,000 and your um tax rate is 20%, uh then you've got$10,000 of taxes to pull out of your pocket. So weigh that carefully uh and also in addition to whatever else uh may be coming in the door that year. Maybe one year you do more, one year you do less. We talk about this all the time with our clients. What what is the timing, what is the uh order, what is this the is the strategy. Um but that is a big deal. Okay, so again, if you're a federal worker, uh contact us, let's talk about that. That starts January 1st, uh, and so we can go have a plan in place.

SPEAKER_02:

Yeah, absolutely. I mean we talk about Roth strategies constantly, and if you have the opportunity to put away into a Roth um as well as convert, and again, it's it's not an all-at-on thing, and and very few people can or even should do that um all at once. Um but yeah, set a strategy over five, ten years and start that conversion. Um it fantastic, really thankful that that's we talk about a lot, Evan.

SPEAKER_03:

Uh we are in a season of lower taxes. We have been uh for quite a while since the Reagan years. And even with the big uh with the well the 2017 tax cuts that were extended, um they're one of the lowest it's been even during Reagan's years. And so take advantage while they're on sale, they will not be on sale forever. All sales end, okay? And so it has been extended through the holiday season. Whatever. And it will be extended as long as somebody else comes in and changes them. So we feel like we feel pretty good about the next three and a half to four and a half years. After that, everything's on the table. As always, we have a lot of debt. So we do feel taxes, the tsunami of taxes we feel are coming. Let's get what we can tax free while we can.

SPEAKER_02:

Yeah, absolutely. Number four, so outside of the 401ks and employer-sponsored plans, um traditional IRA and Roth contribution limits have also increased. Just real quick, IRA contributions for 2026 under the age of 50, um 7,500, that's up 500 from last year. And then the catch-up contributions are 1,100.

SPEAKER_03:

Okay. Thanks. Kind of an odd number, but that's that's good. Up a hundred bucks. 8,600. Yeah, I don't know. No, that they were 8,000 last year, right? Yeah, yeah. Okay, so up 600 bucks for catch up.

SPEAKER_02:

Um a couple of things to keep in mind. Um your modified adjusted gross income phase out ranges for making deductible contributions for a traditional IRA. So basically, um if you're putting away into a tax-deferred traditional IRA, if you start making too much money, you no longer get that deduction at the end of the year on your taxes. Um and we can run through these numbers uh uh real quick about single and married filing jointly. But the thing to consider here is if you are making that money, you should already be considering a Roth, unless you really need that deduction. But the deduction phase out limit's not as high as you'd think. Once you hit that, you might as well be in a Roth the whole time at that point. If you're not getting the deduction, there's no reason to be putting R.

SPEAKER_03:

Because you make too much money to do a Roth. But there is a there's a window. There's a substantial window. All right. Um And even if you can't though, of course, and you may bring this up in a moment, uh, is you can do a backdoor Roth. So put money into the IRA. You don't get a deduction if you make too much money, but as you transition it to a Roth, uh there's no taxes either because you you already pay taxes on that money anyway. So there are ways around all of these rules here. Uh you just gotta know what you're doing and and don't mess it up.

SPEAKER_02:

And be careful with the backdoor Roth because there are several caveats that can get you in trouble if you do are not aware of them. Um so the single head of household deduction um for modified adjusted gross income, uh$81,000 or less, you get the full deduction. Um partial deduction, so the s the phase-out stage is between$81 and$81,000 and$1 and$91,000 a year. Okay. Um no deduction if it's over$91,000. Uh married filing jointly uh is$129,000 or less, and you get the full deduction. Um between$129 and$149 is the phase out, so you get partial deduction. And then$149 or more no deduction. Now, I'm gonna skip ahead a little bit to the Roth contribution limits. So for 2026 single, you can't make more than$168,000 or else you can't contribute to a Roth. So that's from$81 to$168, that's a good window. Okay. Uh and then filing jointly for 2026, that went up a little bit to$252,000, uh$252,000 to where you're saying still able to contribute to a Roth. Um that window is between it's almost it's a little bit over$100,000. So$149 to$252. So that's a good window. You're not getting the du deduction. Why not put it in the Roth? Maximize that.

SPEAKER_03:

Right. And and again, it's this is all numbers we have to run. We have software, but we also have expertise. We also understand all the new rules coming out. Uh so you you need a plan. Yeah. It's it's as simple as that. You need a plan, and this is just one segment of what we've been talking about. Is is uh you you you pull all these areas together. We have literally 12 to 15 different areas that can be worked on to optimize your retirement. Um and I've had people come in, it's so funny, and they'll say, just put me down to live into age 80. I said, You write it down, you notarize it because that's that's what we'll plan. But otherwise, I tell you what, it's it's exponential, exponential. Healthcare is exponential, uh, technology is exponential. So every discovery they make leads to three more, and our lives are getting longer and longer, and so we've got to be uh planned. I'd rather plan to live too long. That's too short.

SPEAKER_02:

That's right, but it all has to come together. Absolutely. Folks, don't forget to check out our website, masterplanretire.com, uh, to schedule your complimentary consultation.

SPEAKER_03:

Um, really glad you joined us today. Hope you'll visit the website, masterplanretire.com, and until we see each other again, plan well and prosper. Take care.