As suggested in last week’s Blog, the 2025 government shutdown has ended after a record 43-day inconvenience. During the associated information blackout, pertinent essential tax planning data went unreported, delaying our ability to assist clients and listeners in decision-making aimed at minimizing taxes, both for this year and next.

With the re-opening, we are seeing some data that can now be discussed with greater certainty. Today’s analysis centers on 2026 Company-Sponsored Retirement Plan Contributions, as higher limits were finally released. Depending on the nature of the Employer, these Plans span a range of what we call the “4” Accounts. The 401(k) is most common and well known, so for purposes of this Blog, just know that what applies to the 401(k) also applies to 403(b), 457, and similar Plans.

Contribution limits for Participants in 401(k) Plans have been increased to $24,500 for 2026, up $1,000. This represents an increase of 4.26% for all account-owner participants. Employees who will reach age 50 or more by year-end 2026 are also allowed to make “catch-up” contributions of up to $8,000, an increase of 6.67% from 2025. Special provisions are made for Participants ages 60 through 63 at year-end. This group is able to contribute up to an unchanged $11,250 as their catch-up contributions.

We should note that employees earning more than $145,000 annually from their Sponsoring Employer will be required to make all catch-up contributions Roth-style, meaning these amounts must be contributed using after-tax funds. This is not an optimum method of contributing for long-term tax-free growth, and those funds might be better placed in a Roth IRA.

Employee contributions to 401(k) Plans must be made through salary deferrals and must be made in the year intended. Taxpayers should implement payroll changes for January 1, 2026, as soon as possible to max out contributions. We generally recommend spreading Plan deferrals throughout the year, so begin planning now for maximizing personal benefits.

Employer contributions to 401(k) Plans are optional and vary among employers. There are no special arrangements for individuals to make, except for Participants who are unable to max out their own contributions. For these people, we suggest they contribute enough through their salary deferrals to realize the entirety of any Employer matching funds.

Self-employed savers who utilize a Personal 401(k) Plan have the same limits for Employee Deferrals.

Complexity abounds in Retirement Account planning. We can help.