401(k) and Roth Catch‑Up Updates – Explained in Plain English

This week I came across an unusual video that stopped my scrolling and was able to keep my attention for a solid five minutes late at night. It showed someone with a blank canvas painting a picture from start to finish while following a tutorial on YouTube without ever pressing pause. There was something captivating about how each stroke seemed so easy on its own, but together they created something surprisingly complex.

That’s exactly how I’d like you to approach today’s topic. I’ll walk you through each step in a straightforward way —each individual concept simple on its own, yet by the end, you’ll see how they fit together into a clear picture of the new 401(k) limits, Roth catch-up rules, and how these changes may affect you.

 

401(k) Contribution Limits

Let’s start with the foundation by introducing the three limits regarding 401 (k) contributions (I’ll use mnemonic devices to help).

1. 402(g) Limit: think of this as maximum that can come from your grit, in other words, this is the most you, as an employee, can add to your 401(k) plan. For 2026, this limit is $24,500.
2. 415(c) Limit: this is the combined amount that you and your employer can add to your 401(k) plan. For 2026, this is $72,000.
3. 401(a)17 Limit: the highest number of characters for the highest dollar – there is a $360,000 cap on the amount of annual compensation that is calculated towards employer 401(k) contributions. For example, if an individual earns $500,000 and the company contributes 10% to their 401(k), only $36,000 (10% of $360k) can go into the plan.

 

In many airlines, once the company “hits” one of the two bottom limits, a pilot will usually have the choice between receiving those funds as “spill cash” through their paychecks or allocate those contributions to different types of accounts available to them. For the purposes of today’s topic, the focus will be on the first two limits: 402(g) and 415(c).

 

Catch-Up Contributions (Age 50+)

Now that we’ve painted the basic picture of the mechanics of these contributions, we can talk about the nuance of the catch-up contributions for anyone age 50 or over.

• If you turn 50 or more in 2026, employee catch-up contributions of $8,000 for 2026 are available.
  • This would make your annual employee 401(k) limit $32,500 ($24,500+$8,000)
  • As long as you are the one making this additional contribution, not the employer, your combined limit is also increased to $80,000 ($72,000+$8,000)
• To add another twist, if you turn 60 to 63 in 2026, there is an additional “super-catch-up” employee contribution of $3,250 that follows the same line of thinking.
  • Your annual employee 401(k) limit would be $35,750 ($24,500+$8,000+$3,250)
  • Your combined limit is then increased to $83,250 ($72,000+$8,000+3,250)

 

Catch-Up Contributions for Higher Income Earners

At this point, it’s okay to take a few seconds to process all the numbers and make sure you understand them all. We’re about to jump to the most elaborate portion of the painting—Roth Cath-Up.

• If you made less than $150,000 individually (not as a household) in FICA wages in 2025 (Box 3 of your W-2), you have the option for your catch-up contribution to be either pre-tax or Roth in 2026.
• However, if you earned more than $150,000 in FICA wages for 2025, your 2026 catch-up contribution MUST be Roth.

 

Practically speaking, this change brings some tax consequences to someone over 50 and earning over $150k in 2025 who was previously just contributing pre-tax to their 401(k). For a 55-year-old pilot in the 32% marginal tax bracket with no other unique tax situations, this will likely translate to an additional $2,560 in tax withholdings for 2026 (32% of $8,000). When divided by 24 pay periods in a year, we are looking at $106.67 less coming to each paycheck.

Although this rule may be somewhat disappointing to an individual who is used to only making pre-tax contributions, this can actually be of benefit years down the road. Retiring with Roth funds provides peace of mind by knowing that those dollars will never be taxed again, flexibility for lump-sum distributions, and is a helpful tool that can be used for tax planning and estate planning considerations.

On the other hand, imagine you already have a mix of Roth and pre-tax contributions, and you want to keep that ratio the same – how do you calculate what your “pre-catch-up” contribution should be? Here are the simple steps:

• Calculate in dollars how much you intend to contribute to Roth by the end of the year.
  
  • If you are 55, maxing out your 401(k), made over $150k for 2025, and wanting the ratio to be half and half, then you would have $16,250 pre-tax and $16,250 in Roth by the end of 2026 ($32,500 total).
• Subtract the dollar amount in Roth by the catch-up that you will automatically receive.
  1. $16,250 – $8,000* = $8,250 (this is how much Roth you want from your “pre-catch-up” contribution)
  • *If you are turning between 60 to 63 in 2026, this number would be $11,250 ($8,000 + $3,250).
• Divide the number you found by the 402(g) limit of $24,500.
  1. $8,250 / $24,500 = 0.3367
  • In other words, you want approximately one third (33.67%) of your “pre-catch-up” contributions to be Roth and the remaining to be pre-tax to have a half/half ratio by the end of the year in this specific example.

 

Timing of Contributions 

Last but not least, some airlines will require employees to reach their 402(g) limit of $24,500 before starting catch-up contributions, while others allow for those to be done simultaneously. Additionally, you may need to adjust settings to positively elect catch-up contributions since the IRS rules have changed. If you are not sure of your “enrollment status” for the catch-up, it may be a good idea to contact your HR department to confirm.

If you’ve made it to here, congratulations! You now have a solid grasp of the big picture changes to the 2026 401(k) limits and Roth catch‑up rules. Taking a few minutes to understand these updates and evaluating if any adjustments to your contributions are needed can go a long way toward keeping your retirement plan on track.