How to Maximize Your 401(k) Contributions in 2026
If one of your financial goals this year is to retire comfortably, one of the most impactful things you can do is maximize your contributions to your employer-sponsored retirement plan.
Whether you participate in a 401(k), 403(b), or 457 plan, increasing your retirement savings not only helps build long-term wealth but can also reduce your current tax bill if you're contributing on a pre-tax basis.
Unfortunately, many employees unintentionally leave thousands of dollars of tax-advantaged savings on the table each year simply because they don't review their contribution elections.
If you've recently received a raise, changed jobs, or simply haven't looked at your retirement plan contributions in a while, now is an excellent time to review them.
In this article, we'll discuss four strategies that can help you maximize your workplace retirement plan contributions in 2026, along with an additional strategy for investors who want to save even more outside of their employer-sponsored plan. The strategies below are based on the concepts discussed in the podcast episode.
Why Maximizing Your Retirement Contributions Matters
Employer-sponsored retirement plans remain one of the most valuable wealth-building tools available.
They offer several important benefits:
Potential employer matching contributions
Tax-deferred investment growth
Immediate tax deductions for traditional contributions
Tax-free withdrawals in retirement for Roth contributions (if qualified)
Automatic payroll deductions that make saving easier
Over a 20- to 30-year career, consistently maximizing your retirement contributions can potentially add hundreds of thousands—or even millions—of dollars to your retirement savings through the power of compound growth.
2026 401(k), 403(b), and 457 Contribution Limits
Before discussing strategies, it's important to know the current IRS contribution limits.
For 2026:
Contribution Type2026 Limit Employee Contribution $24,500
Catch-Up Contribution (Age 50+) $8,000
Enhanced Catch-Up (Ages 60–63) $11,250
Total Employer + Employee Contribution$72,000 (excluding catch-up contributions)
*The enhanced catch-up provision depends on your employer's plan adopting the applicable SECURE 2.0 provisions.
Strategy #1: Maximize Your Regular Employee Contributions
For anyone under age 50, the first objective should be maximizing the standard employee contribution.
For 2026, that amount is:
$24,500
Many retirement plans allow you to contribute either:
A percentage of your paycheck, or
A fixed dollar amount per pay period.
If you've already been contributing throughout the year but aren't on pace to reach the annual limit, simply recalculate what needs to be contributed during your remaining pay periods.
Example
Suppose:
You want to contribute the full $24,500
You receive 24 paychecks per year
Your contribution would be:
$24,500 ÷ 24 = $1,020.83 per paycheck
If you receive 26 paychecks each year:
$24,000 ÷ 26 = $942.31 per paycheck
Many employees increase their contributions after receiving annual raises, allowing them to save more without significantly affecting their take-home pay.
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Strategy #2: Take Advantage of Catch-Up Contributions After Age 50
Once you reach age 50, the IRS allows you to make additional retirement plan contributions.
For 2026, individuals age 50 or older may contribute:
Regular contribution: $24,500
Catch-up contribution: $8,000
Total employee contribution: $32,500
These additional contributions can make a significant difference for individuals approaching retirement who may need to accelerate their savings.
If you're behind on retirement savings, catch-up contributions represent one of the easiest ways to narrow that gap while also reducing your taxable income if contributing on a pre-tax basis.
Strategy #3: Enhanced Catch-Up Contributions for Ages 60–63
One of the most significant changes under the SECURE 2.0 Act is the enhanced catch-up contribution available for certain older workers.
Beginning in 2026 (subject to plan adoption), employees between ages 60 and 63 may qualify for an increased catch-up contribution.
Instead of the standard $8,000 catch-up, eligible participants can contribute:
$11,250
That allows total employee contributions of:
Standard contribution: $24,500
Enhanced catch-up: $11,250
Total: $35,750
However, not every employer has updated its retirement plan to include this provision.
Before assuming you're eligible, contact your:
Human Resources department
Retirement plan administrator
Payroll department
to verify whether your plan allows the enhanced catch-up contribution.
Strategy #4: Utilize After-Tax Contributions and the Mega Backdoor Roth
Many high-income earners aren't aware that some employer plans allow contributions above the normal employee contribution limits.
This is commonly known as the:
Mega Backdoor Roth Strategy
For 2026, the total combined contribution limit between employee and employer contributions is:
$72,000
This includes:
Employee salary deferrals
Employer matching contributions
Profit-sharing contributions
If your employer's retirement plan allows after-tax contributions, you may be able to contribute up to the IRS annual maximum after accounting for:
Your own pre-tax or Roth contributions
Your employer's matching contributions
Example
Assume:
Age 60
Salary: $180,000
Employer match: 3%
You contribute:
$35,750 (enhanced catch-up)
Employer contributes $5,400
Total contributions:
$41,150
Since the IRS limit is $72,000, you may be able to contribute approximately:
$30,850 of additional after-tax contributions.
If your employer also allows in-plan Roth conversions, those after-tax dollars can potentially be converted into a Roth 401(k), allowing future investment growth to become tax-free (assuming qualified distributions).
This strategy can be extremely valuable for high-income professionals seeking additional Roth savings beyond traditional contribution limits.
Check Whether Your Employer Offers After-Tax Contributions
Not every retirement plan includes this feature.
Some employers offer:
After-tax contributions
In-plan Roth conversions
Automatic Roth conversions
Others offer none of these options.
Because plan rules vary significantly, it's worth contacting your retirement plan administrator to determine which features are available.
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Don't Forget About Employer Matching Contributions
While maximizing your own contributions is important, don't overlook your employer match.
Employer matching contributions represent one of the few opportunities to receive an immediate return on your investment.
For example:
If your employer matches:
100% of the first 5% you contribute
and you contribute only 3%, you're effectively leaving free money on the table.
Before increasing contributions elsewhere, make sure you're contributing enough to receive your full employer match.
What If You Still Want to Save More?
Some investors fully maximize every available retirement account and still have additional money they want to invest.
Fortunately, there is another excellent option.
Open a Taxable Brokerage Account
Unlike retirement accounts, taxable brokerage accounts have:
No contribution limits
No income restrictions
No early withdrawal penalties
Complete flexibility
Although investments aren't tax-deferred, they can still be extremely tax-efficient.
Why ETFs Can Be Tax Efficient
Many investors choose low-cost index ETFs inside taxable brokerage accounts because they generally produce fewer taxable capital gains distributions than actively managed mutual funds.
This allows investors to:
Continue investing regularly
Allow investments to grow
Potentially defer capital gains taxes until shares are eventually sold
For long-term investors, this can be an excellent complement to retirement accounts.
Traditional vs. Roth Contributions: Which Is Better?
This is one of the most common questions investors ask.
The answer depends on several factors, including:
Your current tax bracket
Your expected retirement tax bracket
Future income expectations
Estate planning goals
State income taxes
Generally speaking:
Traditional Contributions
May make sense if you:
Are currently in a high tax bracket
Want an immediate tax deduction
Expect lower taxable income during retirement
Roth Contributions
May make sense if you:
Expect higher taxes in retirement
Are early in your career
Want tax-free retirement withdrawals
Value tax diversification
A financial planner or tax professional can help determine which strategy best fits your situation.
Final Thoughts
Retirement planning isn't just about choosing the right investments.
It's also about maximizing every tax-advantaged savings opportunity available to you.
If your goal is to build long-term wealth, consider reviewing:
Your current contribution percentage
Employer matching opportunities
Catch-up contribution eligibility
Enhanced catch-up provisions
Mega Backdoor Roth availability
Additional taxable investment opportunities
Small adjustments today can significantly increase the amount available to support your retirement lifestyle decades from now.
If you're unsure whether you're maximizing the opportunities available through your employer-sponsored retirement plan, consider speaking with a qualified financial professional who can help evaluate your options.
As always have a wonderful day,
a better weekend,
and I look forward to writing to you next Friday!
Written by Ryan Morrissey CFP®, CLU®, CHFC®, CMFC
Founder & Principal Advisor of Morrissey Wealth Management
Host of the Retire with Ryan Podcast
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Frequently Asked Questions
What is the maximum 401(k) contribution for 2026?
For 2026, the employee contribution limit is $24,500. Individuals age 50 or older may contribute an additional $8,000 catch-up contribution. Eligible individuals ages 60–63 may qualify for an enhanced catch-up contribution of $11,250, depending on their employer's plan.
What is a Mega Backdoor Roth?
A Mega Backdoor Roth strategy allows certain employees to make after-tax contributions to their 401(k) and convert those contributions into Roth assets if their employer's plan permits it.
Should I contribute to a traditional or Roth 401(k)?
It depends on your current tax bracket, expected retirement income, and long-term tax planning goals. Many investors benefit from having a combination of both traditional and Roth retirement savings.
Can I invest more after maxing out my 401(k)?
Yes. Many investors continue saving through taxable brokerage accounts, which have no contribution limits and provide flexibility while remaining tax-efficient when invested appropriately.