Question 1

What is the 401(k) contribution limit for 2026?

Accepted Answer

The employee contribution limit for 2026 is $24,500. Workers aged 50 and older can contribute an additional $7,500 catch-up, for a total of $32,000. A new provision allows those aged 60-63 an enhanced catch-up of $11,250, for a total of $35,750. The combined employer and employee contribution limit is $72,000.

Question 2

What happens if I do not contribute enough to get the full employer match?

Accepted Answer

You lose free money. If your employer matches 50% of contributions up to 6% of salary and you only contribute 3%, you get half the available match. On an $80,000 salary, contributing 6% ($4,800) gets you $2,400 in matching. Contributing only 3% ($2,400) gets just $1,200 in matching. That $1,200 difference compounds over decades.

Question 3

What is the difference between a Traditional and Roth 401(k)?

Accepted Answer

Traditional 401(k) contributions are pre-tax, reducing your current taxable income, but withdrawals in retirement are taxed as ordinary income. Roth 401(k) contributions are after-tax, so they do not reduce current taxes, but qualified withdrawals in retirement are completely tax-free. Choose Traditional if you expect a lower tax rate in retirement; choose Roth if you expect a higher rate.

Question 4

Can I withdraw from my 401(k) before age 59 1/2?

Accepted Answer

Early withdrawals before age 59 1/2 are subject to a 10% penalty plus ordinary income tax. Exceptions include the Rule of 55 (leaving your job at age 55 or later), substantially equal periodic payments (72(t) distributions), certain hardship withdrawals, and disability. Loans from your 401(k) are also possible, up to 50% of your vested balance or $50,000.

Question 5

Should I contribute to a 401(k) or pay off debt first?

Accepted Answer

At minimum, contribute enough to get the full employer match, as the match provides an immediate 50-100% return. After that, if you have high-interest debt (above 7-8%), paying it down first is usually more beneficial. For lower-rate debt like a mortgage, the tax-deferred growth and employer match of a 401(k) typically outperform the interest savings from accelerating debt repayment.

Question 6

What happens to my 401(k) when I leave my job?

Accepted Answer

You have four options: leave the money in your former employer's plan (if allowed), roll it into your new employer's 401(k), roll it into an IRA, or cash it out. Cashing out triggers income tax plus a 10% penalty if you are under 59 1/2. Rolling into an IRA typically provides the most investment choices and lowest fees.

Question 7

When do required minimum distributions (RMDs) start?

Accepted Answer

For Traditional 401(k) accounts, RMDs begin at age 73 under current law (SECURE Act 2.0). Roth 401(k) accounts are no longer subject to RMDs starting in 2024. If you are still working and do not own 5% or more of the company, you can delay RMDs from your current employer's plan until you retire.

Age 30	$9,630.00
Age 35	$73,832.74
Age 40	$173,488.80
Age 45	$324,400.35
Age 50	$548,974.47
Age 55	$878,920.87
Age 60	$1,359,041.59
Age 64	$1,892,949.61

Age \| Salary \| Your Contrib \| Match \| Balance
Age 30 \| $100,000.00	$6,000.00 + $3,000.00 = $9,630.00
Age 35 \| $115,927.41	$6,955.64 + $3,477.82 = $73,832.74
Age 40 \| $134,391.64	$8,063.50 + $4,031.75 = $173,488.80
Age 45 \| $155,796.74	$9,347.80 + $4,673.90 = $324,400.35
Age 50 \| $180,611.12	$10,836.67 + $5,418.33 = $548,974.47
Age 55 \| $209,377.79	$12,562.67 + $6,281.33 = $878,920.87
Age 60 \| $242,726.25	$14,563.57 + $7,281.79 = $1,359,041.59
Age 64 \| $273,190.53	$16,391.43 + $8,195.72 = $1,892,949.61

401(k) Calculator

2026 IRS Contribution Limits

Traditional 401(k)

Projected Growth (Every 5 Years)

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