The whole point of saving money in a retirement account is to pay less in taxes, but that doesn't mean you can avoid them forever. If you don't want to pay taxes upfront, like you would with a Roth account, your next best option is to delay taxes until you've retired -- and, hopefully, dropped into a lower tax bracket.

But as of Jan. 1, 2026, the IRS has limited some workers' ability to use this strategy with their traditional 401(k)s. If you're one of those affected, you might have to brace for a bigger tax bill next year.

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High earners must make Roth catch-up contributions going forward

All workers can contribute up to $24,500 to a 401(k) in 2026, . They can use a traditional 401(k), a Roth 401(k), or both to do it. But a recent law change has made catch-up contributions -- additional contributions workers aged 50 and older are allowed to make -- more restrictive for high earners.

Beginning this year, any worker earning more than $150,000 is only allowed to make Roth 401(k) catch-up contributions. This will force them to pay taxes on these funds when they file their 2026 return, rather than waiting years or even decades until they've retired.

This could be costly, especially since these individuals likely fall into a high tax bracket. But it's not all bad news. After you've paid taxes on your Roth contributions, you can withdraw them tax- and penalty-free as long as you're at least 59 1/2 and have had the account for at least five years.

What you can do to prepare for the change

If you're affected by this change, you can continue to use a traditional 401(k) until you hit the standard $24,500 contribution limit that applies to adults under 50. After that, you must switch to a Roth 401(k) if you'd like to set aside more money for 2026. If your employer doesn't offer a Roth 401(k), you may not be able to save any more in your 401(k) this year.

You can talk to an accountant who may be able to advise you on how the change will affect your taxes, so you can budget accordingly. Having a rough idea of how much you'll earn and how much you plan to contribute to each type of 401(k) can help with this.

You should also know that the $150,000 income threshold is indexed to inflation. If you're only slightly over it, there's a chance you may still be able to make traditional 401(k) catch-up contributions in future years. Always check the rules for the current year before making any retirement account contributions, to make sure you understand what's allowed and what isn't.