A two-front shift is reshaping how American workers will save for retirement this year. The long-delayed Roth catch-up mandate under the SECURE 2.0 Act took full effect on January 1, forcing higher-paid employees to route their extra retirement dollars into after-tax accounts, even as a quiet but growing number of employers — most recently customer-experience giant TTEC — suspend their 401(k) matching contributions for the first time since the COVID-19 downturn.
Higher Limits, New Strings Attached
The IRS confirmed that the 2026 employee deferral limit climbed to $24,500, up from $23,500 in 2025, with the combined employee-plus-employer cap rising to $72,000. Workers age 50 and older can add an additional $8,000 catch-up contribution, while a special "super catch-up" window for savers aged 60 to 63 permits as much as $35,750 in total deferrals where plans allow.
The IRA contribution limit also rose to $7,500, with a $1,000 catch-up for those over 50.
But for higher earners, the headline change is a structural one. Under the SECURE 2.0 Act's Roth catch-up provision, any employee whose FICA-taxable wages topped $150,000 in 2025 must now make all catch-up contributions on a Roth basis — meaning after-tax dollars rather than the traditional pre-tax route. The threshold uses the prior-year W-2 from the plan-sponsoring employer, and the IRS issued final regulations earlier this year cementing the framework.
"You'll lose the upfront tax deduction you may have had previously," Fidelity noted in its plan-sponsor guidance, "but you can potentially benefit from tax-free earnings and withdrawals as long as you meet the 5-year aging rule." Workers whose plans do not offer a Roth 401(k) option will be locked out of catch-up contributions entirely until their employer adds one.
The Quiet Return of Match Suspensions
The rule change has landed at an uncomfortable moment. Fortune reported on May 18 that TTEC Holdings notified employees in an April 30 memo from its chief people officer that the company would suspend its discretionary 3% match for roughly nine months, with reinstatement contingent on business performance. Sherwin-Williams and Drexel University paused matches earlier in the cycle before restoring them.
The trend echoes the 2008 financial crisis and the 2020 pandemic, the last two periods of broad match suspensions. Vanguard data show roughly 70 million Americans participate in employer-sponsored 401(k) plans, and the average employer match runs about 4.6% of pay.
The compounding cost of even a temporary pause is substantial. For an employee earning $85,000 a year, a 4.6% match equates to $3,910 in foregone contributions annually — roughly $78,200 over 20 years, which would grow to about $146,455 at a 6% average annual return.
What Savers Should Do
Advisers urge participants to maintain their own deferral rate even when an employer pulls back. "Reduced employer contributions can have a long-term effect on employees," human-resources outlet HR Brew noted, "and HR should message to workers that they should try to sustain their own contributions so they won't fall behind when matches are reinstated."
For high earners now navigating the mandatory-Roth rule, the trade-off is more nuanced. Giving up the immediate deduction stings, but tax-free withdrawals in retirement may prove valuable if marginal rates rise — a real possibility given the federal deficit trajectory and the looming sunset of Tax Cuts and Jobs Act provisions at the end of 2025 that Congress has yet to fully extend.
With the Federal Reserve holding the policy rate at 3.50%–3.75% and inflation running above 3%, the 2026 retirement landscape is one of higher nominal limits, tighter tax structures, and shakier employer support — a combination that places more of the savings burden squarely on workers themselves.
Sources: IRS, Kiplinger, Fortune, Fidelity, U.S. News & World Report