3 Big 401(k) Updates That Could Impact Your Future

is different? How does it affect your investment strategy? I am so excited because today, we are going to unpack everything you didn't know about your 401k in 2026, including the latest changes and how they'll affect you. And with that, let's jump right in.

So Brian, 401k's, they are a big deal. That's not a surprise. A matter of fact, 43% of the working population, I was one and two workers actually has access to a 401k right now.

“Yeah, I think it's important for, because everybody knows we like 401k's and more to come”

on that.

But when I at least do a refresher on why 401k's are so powerful.

Well, and there have been some changes in 2026 that we want to make you aware of. But before we talk about what's changed, let's talk about what's stayed the same. Let's talk about what a 401k is. And if we're just going to do like, you know, webster dictionary definition, 401k is an employer sponsored or timely account with special tax benefits that allow employees to contribute

a portion of their paycheck to save for their retirement. I get to sacrifice a little bit of today to pay for my future self. OK, I love when we get to give definitions, but that's not the sexy sizzle stuff. Let's talk about why we actually love 401k's. That's why you can tell I was already giving it a prelude to it.

Here's the first thing. I love getting that free money. Get in there and get that free money from your employer.

“Because it's, by the way, they've already built it into their compensation analysis.”

You're literally leaving money on the table if you don't take advantage of it. Yeah, we know that right now 92% of employers. Nine out of 10 employers with a 401k offer some sort of match, some sort of employer contribution. So not only do you get to save for your future and put away some of your dollars, but your employer is partnering with you, putting money in there that can help you build towards

financial independence. I mean, even if there's not a match or still some tax benefits, and then here's the second part of this.

You know, you hear about it, whether it's atomic habits or other things, I always say,

hey, make the good habits as easy as possible, make the bad habits that much harder. Well, guess what is automatic for the people? You're a 401k, because this is going to allow you to definitely streamline making the good habit of building wealth that much easier through automated automatic investments every month.

Yeah, it's a beautiful thing when you can kind of set it and forget it. I know that every month, every payroll, every pay period, I want x% of my salary to go into my 401k and I've already selected my investment option. So I don't have to think about it again. I can literally set it up at the beginning of the year and just let it rock and roll.

It's a great way to set up automatic wealth building, because once those dollars get into the account, then you get to take advantage of the next thing, which is compound growth. Woo, woo. I love it. These all work together, because you're not only getting the free money from the employer,

you're not only doing the automatic behavior that's building wealth building, but you're getting to stack this on top of compounding growth. Guys, this is what changed my life. Y'all have all heard my story if you haven't. It's a millionaire mission and elsewhere that I had an economics teacher with an off-hand

comment that he said, "Everybody in this room, this is my junior senior year of high school." If you could just save $100 a month, you'd be a millionaire and I was like, "What? I could be a millionaire for $100 a month. I'm here to tell you with a 401k, it's even easier than that if you'll just let compounding growth do the magic work."

And the earlier you start that, the easier the path becomes. You just said, "Bron, that your economics teacher said, if you could save $100 a month, what's actually even a little bit better than that.

“If you want to be a millionaire, by the time you get to $65 and you are 20 years old”

today, saving $95 a month is all you would have to do to get there."

And when you get to $65 and you have your million dollars, do you realize that only $51,000

of that would be money that you've put in? The other $950,000 would be growth, would be compound interest, would be your money working for you. The earlier you figured out the more powerful I can bet. Well, that's 20 year olds, but we all know, most people don't start saving investing

when they're 20. That's a okay because if you're 30, still 89% of that million dollars is going to come from the growth, the compounding growth, even for 40 year olds. So even if you feel like you've gotten a late start on this, they're still an opportunity that 77% can come from the growth of compounding.

That's just using the power of compounding growth. But if you take it once again, in combination with that your employer is going to be dumping money in there free or already prepaid into this thing for you, that makes it that much even more magical. So listen to this, now it's 97% is growth and match from, you know, of your million dollars.

If you get a dollar for dollar match and your employer puts money in with you, it cuts your work and has.

“So 90, 970,000 dollars essentially is coming from the growth and the employer match for the”

30 year old. Because you're like, okay, good on the 20 year olds, let's talk about us 30 year olds. It's still 94% or you're putting in close to $57,000, the other, I mean, 900 plus for the $1,000 is coming from the growth and the employer match even for the 40 something, 88% growth opportunity.

You're only going to put in 117,000 dollars, the other, you know, eight hundred and eighty

thousand dollars are going to come from the employer match and the growth, magical, incredible

stuff. Don't sleep on that. To see how powerful your specific dollars are. Maybe you're not a 20 year old or a 30 year old or a 40 year old, but you wouldn't know what can your dollars actually turn into.

We have a great tool that you can check out. If you go to moneyguide.com/resources, check out our wealth multiplier tool. And this will show you what every dollar you save right now can turn into by the time that you retire and we'll even give you some numbers.

“Hey, this is how much you should save starting at zero to get to a million dollars.”

And remember, if you get an employer match, if you're getting free money and it's a dollar for dollar match, you can cut those numbers in half.

That's how powerful the employer match and the compound growth can be inside your 401ks.

Well, I don't know if it's because I come from a public accounting background. So, the CPA and me just wants to sing with joy and excitement about the tax benefits of 401ks. It keeps getting better. And keep stacking these things on top is because even when these things were set up, like

in the early 80s, they had traditional tax benefits, meaning that you get a tax deduction on your contributions, the money's going to grow in a tax deferred way and you don't even pay taxes until you pull the money out in the future. But that's the traditional way. But then we'll come along in the late 90s, early 2000s, we added with this feature called

the Roths. Well, late 90s, like 1998, then they came into that, that was Roth IRAs and then we got into the 401ks later. This is even better because you remember how we were just showing that for a 20 something,

you might find out that 97% of your million dollars is from the growth and the employer

portion for the 30 year old, it's still an incredible opportunity. What if I told you we could make that tax free? Because Roth accounts what happens when you fund it is a Roth contribution. You don't get the tax deduction now. But what happens is all that growth is completely tax free.

That is incredible, guys.

“This is why you have to think about when people are out there on social media, telling you”

401ks are a joke, they're not good for you, but who we, this means that you're probably selling in life insurance or some other horrible product because if you just see it, if you could see the free money, automatic for the people, compounding growth, tax benefits, this thing is good, get in there and get a piece of that. What's great is that right now 93% of employers that actually sponsor or off for a 401k

plan allow you to make Roth contribution. So this isn't something that's hard to find, it's not something that's likely not available to you. If you have access to a 401k, there's a great chance that you could begin taking advantage of Roth contributions.

And one of the beautiful pieces of that is you know, if you're someone who's been saving and if you're someone who's been putting money away, you've been able to do Roth IRAs. And those are capped in 2026 and $7,500, but 401k's have different contribution limits than IRAs and they are much, much higher. This is a great place for you to be able to sock away a lot of your salary, a lot of your

resources. So much so that for most folks, when they cross into seven figure status, when they hit the two comma club and cross over a million dollars, liquid net worth, it often happens inside their 401k and this past year was no different. 401k created a millionaires reached an all-time high in the second quarter of 2025 with

595,000 people hitting millionaire status inside their 401k. Gosh, this stuff just gets me excited because it just shows you the power of use money as a tool. And just try to bring in, how is this, how am I going to use this tool of making my easy habits that much easier and I'm building on this automatic for the people and the compound and growth.

Guys, this is one of the first places we want to talk about because the headline here is, look, in 2026, some of these rules are changing. How do you know what's going on? We are your source here at the money guy show. Let's talk about what's going on with contribution limits.

Yeah, so with a very first big change, actually has to do with contribution limits.

more amazing.

“In 2025, if you wanted to max out a 401k, you could save $23,500 if you were below age”

50.

But now, in 2026, you can actually save $24,500.

If you're age 50 to 59 or 64 in above, you can actually do a catch-up contribution. In 2025, it was $7,500 and 2026, it's now $8,000, and if you happen to fall in that window, a folks that are 60 to 63 years old, you actually even have a super catch-up opportunity. Super catch-up. So not only in 2026, can you do the $24,500 regular salary for all, you could save

an additional $11,250. This is a great way to super charge your time. Look, I'm not going to name names, but we have somebody on the content team that wants us to buy a monster truck. I mean, they literally found a for sale monster truck that they want us to buy.

This would be the super catch-up would be like, a super catch-up monster truck. The monster truck image come up right here, because they've allowed once again something good to get even better. Now, in this vein, so this is a good thing that got even better, there is a little bit

of a caveat that is the second big change we want to make sure you're aware of.

And this has to do with a brand new rule that has been initiated for high earners inside 401k plan. Yeah, now this would, this would hurt a little bit, but it's still kind of cool because

“it allows the catch-up, we all know, here's the thing.”

In the past, you still, if you were to high income tax situation, your 401k, you could make contributions pre-tax like traditional lower your taxes now, and you're hoping down the road that when you retire, you're going to have a lower, much lower tax bracket situation. You can do Roth conversions and other things allows you to manipulate the tax code. Well, as you, as you can imagine, when you get to be 50 and greater, those additional

contributions, it was kind of nice that you could lower your tax bill that much more. Well, that, they've said, wait a minute, you're making a lot of money. We want to now change it to where at least on those catch-ups, once you're 50 and greater, those have to go in his Roth, meaning you no longer get to take a tax deduction on those contributions.

If you have fika wages, we want to go in change rules. Well, now that's going to have to go in Roth, we're going to get our tax money. Yeah, you'll get the tax free growth, but we want our tax dollars now. That's something you ought to be aware of. Yeah, so one of the great benefits is, okay, yeah, you can build up Roth dollars, but there's

a really good chance that this will impact your tax situation. We thought walking through just a very simple case study might be helpful to see this. So, let's talk about catch-up Carl. Catch-up Carl has an income right now, a total income of $200,000. In 2025, he maxed out his 401(k) and because he's over 50, also maxed out his catch-up

contributions. When you take his total income, minus the pre-tax 401(k) contribution, minus the pre-tax catch-up, his actual taxable income was about $169,000. Fast-forward to 2026. Let's assume now that Carl has the same income, $200,000.

He's going to max out the additional salary deferral. That's 24/5 and 2026, and he's going to also do the catch-up contribution of $8,000. But now that $8,000, because he's a high income earner has to be in the Roth bucket. What that means is his taxable income is actually going to be higher. Even though he deferred more into his 401(k) in 2026 than he did in 2025, his taxable

income is actually higher because of that. So, it's something you want to be aware of that while you're still taxing, it's still tax-benefits. This could change your effective tax rates with something you want to make sure you stay mindful of.

And it's around $150,000. That's right. If you're in a higher income situation, pay attention to what's going on with those catch-up

“contributions, just something you should be aware of.”

But hey, boat, you remember what it was like in those early days when we started the company, and we were trying to do everything ourselves. Man, we were wearing like 28 different hats. You start the day thinking you're going to work on things like revenue and strategy and by the end of the day, you're working on payroll forms and onboarding documents.

Yeah, and if we were being honest, it wasn't always the best use of our time.

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One more time, gustow.com/moneygott. So let's talk about big change number three. Now this is one. I'm not excited about it. I don't know how I feel, because I mean, it doesn't mean it's bad.

It just means that it opens it up for more Tom Thorick. And that's alternative investment options in 401k's. Yeah, for those of you that don't remember, there was an executive order directed the department of labor last year to expand the 401k investment options to now include alternative investments.

And I think the way the language is written is, hey, we're not going to exclude them anymore. They're not going to be open to where you might potentially see some alternative investments inside 401k's. And alternative investments being things that are not traditional stocks, not traditional bonds, not publicly traded entities.

And so while it's not a guarantee they're going to be there, there is a good chance that these may start to show up in 401k's. And these could be something where dollars inside of retirement funds could begin being allocated. Well, and let me give you my perspective on this is that I'm not, I'm not against alternative

investments. I mean, I've worked for firms where we did this, you know, whether it was setting up syndicates or setting up private ventures and other things. But this was cherry on on the Sunday for somebody who's already extremely successful. But I worry about Boe is that typical Americans, not necessarily great savers and builders

of wealth. And I love that we have this vehicle that makes it automatic for the people. And I also love the fact that more and more with the fiduciary standards and other things have been put on retirement accounts, you saw the proliferation of more indexes. That's right.

More things that were low costs, more things that were cutting dry, and these things is the economy instead of trying to beat the economy, just be the economy because things were getting better and better through innovation, I don't want this alternative investments to be a distraction. That's right.

From people doing the basics, nuts and bolts of, hey, by the economy, by the index funds, their low costs, they're going to do well for you.

“I don't want you to apple cart turn over and feel like you have to throw those things out”

just because there's some sexy sizzle that's out there with these alternative investors. And so what does this mean practically for you? We just want you to be aware of your allocation. When you're making the choice to defer some of your dollars today and you want to invest them to grow for the future, you ought to know what you're investing in.

So make sure when you go into your plans and you select your investment options and you select your target retirement index funds, it's worth while just to understand what those are investing. And make sure that aligns with what your dollars ought to be doing and what you want your dollars to be doing.

Again, there's more to be seen on this in terms of how it's going to play out and how they're actually going to manifest, but it is something that we want you to be aware of and want you to know is happening inside of your retirement plan. Yeah, let's talk about it because those are the big changes. I think there are some other important just as a basic education of there's some other

big four one K rules that you ought to understand first of all.

If we're all going to be saving and building up this is the first account that's likely to cross into seven figures, well, how do at least know what are the withdraw rules? How do I even get access to my money as I'm building up these big accounts? So retirement assets are built for retirement. So one of the things that's written into them is if you try to access these dollars and

pull them out before you get to a certain age, there's going to be a penalty assessed.

“If you want to make a qualified distribution from your retirement account, from your 401k,”

most times you have to wait until age 59 and a half to be able to pull that money out penalty free, but there is one small caveat. There is something known as the rule of 55 that if you are employed with your employer in the year that you turn 55, you can then access that employer sponsored retirement account. That 401k that 403B before you get to 59 and a half, but if you retire and you roll it

to an IRA or you don't have assets in your current employers 401k, you don't get those assets. You cannot get penalty free access until you get to age 59 and a half. I don't know if we've said it already, but that penalty that we're trying to help you avoid is temporary. That's right.

And that's a painful thing. You're thinking about if you're pulling the money out not only do you have to pay income taxes, but you also if it's if it's traditional, but then you have to pay a 10% penalty. You can essentially gut almost half of the value of your asset just by making these withdrawals.

So we always just want to make sure people are aware and the other thing always, we didn't

really bring it up here, but there are carve-outs for like first-time home buyers, medical expenses, hardships and things like that.

“But just because you can, doesn't mean you should, look, I'm never going to get on if”

you're in a dark, dark situation and you have to get these assets, I mean that's a conversation piece, but it's just don't let this be the first account that you're thinking about. This needs to be a break glass to get access.

Well, and so that's how you access the assets, that's how you withdraw the assets, but one

“of the things you need to know about qualified employer-sponsored accounts for one case”

specifically is that there will be a time where even if you don't want to withdraw the money, the government's going to make you start withdrawing your money, and that's known as taking a required minimum distribution right now for folks who hit 73 years of age, the government's going to say, hey, based on your account value at the end of last year, and based on a mortality factor based on your age, we're going to make you, even if you

don't want to pull money out of this account, pay your income tax, and then we don't care what you do with it after that. It's something you want to be aware of, especially

if you have large pre-tax 401k balances.

Yeah, this is one of those things where as financial planners, it is part of our bread and butter, because we do such a good job of building up these big retirement accounts that they literally create tax bombs that when we've done making a millionaire episodes, we have shown literally, you know, there's sometimes changes that you're nibbling around the corners of things. These are changes when you pay attention to where your required minimum distributions,

what those will look like in retirement, if you've been very successful building retirement assets, seven figures that you have to be careful. You literally will pay millions of dollars more in taxes,

“if you don't structure your account right, so that's why you should definitely be paying”

attention to required minimum distributions. Even if you're in your 40s or 50s, plan ahead, this is the big stuff we do as financial planners to help clients avoid these huge tax bombs. So another thing we want you to recognize is that it's pretty commonplace today, that the employer that you start your career with is often not the employer that you injure career with a lot of times, we are changing jobs and we're moving to different companies,

and what happens likely, or at least we've seen with clients we work with, you kind of leave this trail of old 401k's behind from previous jobs. It's not uncommon for someone to come in, and we look at their account statements, and before we even see the resume, we can kind of see their work history based on where their old 401k's are. So once you're recognizing, you do have some options when you change jobs as it relates to your employer-sponsored retirement plan.

Look, I'm going to use this as a bully opportunity. Look, I'm a nice guy. I don't bully anybody, but I am a bully when it comes to getting access and using your 401k's, because I've seen it. I mean, I made that joke earlier when I think about bad uses of when you change jobs, of your old 401k have seen swimming pools. I've seen shunny, I've seen shunny red pickup trucks.

“Yep. I mean, there are lots of things that I've seen, and that's why the stat that breaks”

my heart is that 41% of Americans will cash out at least a portion of their 401k when they leave their job. But by the way, when I say a portion of their 401k, you realize 85% of these people that are in this 41% take the whole diagonal. That's all, Angela. And I know it probably, because it seems like it's no different when I, when I, when I pick on credit cards, credit cards seem like they are solving all the problems you have at the moment.

Hey, I don't have money right now, but I'd like to buy this thing. And then you have this financial institution that says, "Hey, how got this great thing? I've got this bridge of a credit card where you don't have money now, but you might have it in the future. You can use this and it's a tool that will trap you." Well, I feel like the 401k and early access, because you leave your employment, and then they send you a notice, and then they probably send you a roll over package or distribution

package saying, "Hey, you've got this account. This worth $50,000. $100,000. What would you like to do?" And you're like, "Well, wait a minute, I got kids going to college. I need a new car." I mean, I'm a part of this wall. I want to put a swimming pool in the backyard. What do you know? This is an answer per no. You need this money for the future. You've spent literally decades building up these assets. Don't let a moment of weakness take this opportunity of letting this money continue to work

for you in the long term. So your 50, 60, 70 year old cell looks at you with a thumbs up and then gives you a bear hug for doing things right. Yeah, it's a temptation for a lot of folks when

you change jobs. This is the first time you even recognize I had the option to get to these dollars,

but if you cash them out, not only are you going to pay ordinary income tax, you are if you're under 59 and a half going to pay a 10% penalty. So you're going to wipe out a huge chunk of your army of dollar bills unnecessarily. So let's assume that you're not going to cash it out and you're not going to be one of these 41% of folks that do that, you do have some options. You can roll the money into an IRA and you can choose where that is. Is it a fidelity of anger or a

Charles Schwab? If you're getting a new job and you have a new employer sponsored retirement plan, you can roll it into the new 401k. That's totally something you can do. Or number three,

over a certain amount and it depends on the plan. It's usually either $1,000 or $5,000. If it's

“larger than that, there are no rules that say that you have to move it out, that you have to move”

it somewhere else. So if you work for a fortune 100 company or used to work and it's a great 401k with great options and great tools that you can utilize, you can leave it there. All three of those options. IRA, new 401k, old 401k are fantastic solutions. It would likely be much better than caching it out. So maybe you're thinking, well, how do I decide? How do I know which one of these makes sense? Don't you worry, we have a resource for it. If you go to moneyguide.com/resources,

we actually have a flow chart that can help you figure out what do I do with my old 401k. If this is true, then do this. If this is not true, then do this. And you can literally follow it through

to determine what you should do with your 401k. Besides, cash it out and put a pool in the back of it.

I'm going to say this a little differently. But we just said we had a flow chart. I'm not here flow chart. I'm like, what's he going to say next? We got a diagram of some sentences. No,

“what is this? Every one's a flow chart or a collision matrix. If you want to know, if you got an old”

401k and you just asked yourself, man, what do I do with this? I know I don't want to mess this up. Guys have made this clear. This is a big decision point in my life. Go out there. Moneyguide.com/resources. And you definitely need to check out God An Old 401k. We will give you the decision matrix that lands or all your questions on this. I want to be clear. You guys take a breaker. This is just mean you talk about it. You said that flow chart wasn't cool. And the cool thing

you replaced it with was decision matrix. Well, this is something, yes, because now you're saying, hey, I've got a decision to make this. I need to tell you what to do. This is going to tell me what to do. Where's a flow chart is like, okay, we can agree to disagree. Yeah, I want to find on this one. All right. So moneyguide.com/resources. Go figure out what to do with your old 401k. Now, another thing that we want you to recognize. And this is something we want you to be in

your mind. Because we've already told you, at some point in your financial journey, you will likely lose control of your tax situation. Because the government's going to say, hey, sir or maim, you've done such a good job of building your assets. You've done such a good job of saving. You've done such a good job of building wealth that we're going to force you to start taking some of that money out. And what if it pushes you into a larger tax bracket? Oh, well,

what if you don't need the money? Oh, well, once you hit that age, 73 currently, you don't get to choose whether or not you pull money out. So one of the things that you might want to consider before you get to that age is our Roth conversions. And all our Roth conversion is as a strategy where you convert some of your pre-tax assets to Roth, are there something I should be considering before I get to my requirements? Well, I think about this all the time is because

this is the part we tell everybody financial becoming wealthy is relatively simple. No,

“it's here. I mean, that's not saying that it's easy. And that's why we can give you all the”

free advice. We got a money.com/resources. But it is one of those things where I think it's quite interesting is that when you get to retirement, because these tax bombs that get created with these awesome savings opportunities with four, one case, and so forth, they not only when they make you take the required amount of distribution, impact your taxability of your social security, it impacts the premiums you pay on your Medicare. I mean, this stuff, you start seeing this

a ripple effect. And you just don't know what you don't know because guess what? This is your first

and only retirement. Wouldn't it be nice if you had somebody who's done this literally hundreds if not thousands of times? Well, that's exactly where we come in. We leave the porch light on for you. We work with clients all across the country. As you can tell, we get excited about this because look, I don't know if it's from my public accounting background or if it's bobing and already CFA, but we are in the weeds with this stuff, but we also educators to our core. And if we

can help people maximize and kind of navigate these complex situations, we're here for it. And that's why I'd encourage you if you if you resemble any of this and you've been successful building your army of dollars, go check it out money got dot com slash become a client or just go to moneygot.com or boundwealth.com. You'll see we make it very easy for you to navigate to the become a client section. We love for you to give an opportunity. That's why we plant the seeds of

knowledge so you can reach a level of success that you will definitely need us in the future. I'm your host Brian, join by Mr. Bo, money got team out. The money I show is host about Brian Preston and Bo Hanson. Brian and Bo are partners with a boundwealth management. A boundwealth management is a registered investment advisory firm

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