I hope you're enjoying the holiday season. As we wrap up 2025, we want to express our gratitude for the opportunity to work with you and look forward to what the year ahead will bring!

I'm also reaching out to share a few important updates that may impact your planning for 2026-both for your own retirement savings and for saving on behalf of your children or grandchildren.

2026 Retirement Plan Contribution Updates

The IRS released new retirement contribution limits for 2026. The key changes:

• 401(k), 403(b), 457, and TSP plans: Limit increases to $24,500 (up from $23,500).
• Catch-up contributions (age 50+): Still $8,000, for a total of $32,500.
• "Super catch-up" (age 60-63): Remains $11,250 under SECURE 2.0, for a total of $35,750
• IRAs: Contribution limit increases to $7,500, with a $1,100 catch-up for those age 50+.

 

Why this matters:
These increases give you more room to contribute tax-advantaged dollars, improve long-term tax efficiency, and build additional retirement flexibility-especially if you are in your peak earning years.

 

What you may want to consider for 2026:

1. Review and potentially increase your retirement contribution rate.
2. Confirm IRA eligibility and plan your 2026 contribution approach.
3. If age 50+, decide whether you'll use catch-up contributions.
4. If self-employed, assess whether updates to a SEP or solo 401(k) make sense.

 

New SECURE 2.0 Rule for Catch-Up Contributions (Effective 2026)

Beginning in 2026, participants in 401(k), 403(b), and certain 457(b) plans who:

• are age 50 or older, and
• earned more than $150,000 in FICA wages in the previous year

and wish to make a catch-up, will be required to make any catch-up contributions on a Roth (after-tax) basis.

 

Key examples:

• If you're 52: You may still contribute $24,500 pre-tax (2026 limit) and up to $7,500 as Roth (after-tax).
• If you're 62: You may contribute $24,500 pre-tax and up to $11,250 as Roth under the super catch-up.

 

New Federal Children's Savings Initiative ("Trump Accounts")

A new program allows families to save for children in a tax-deferred investment account with potential long-term benefits.

Program highlights:

• U.S. children born 2025-2028 receive a $1,000 government starter deposit.
• Children born before 2025 and under age 18 may still participate (without the starter deposit).
• Families can contribute up to $5,000 per year per child.
• Funds are invested in low-cost U.S. stock-market index funds and grow tax-deferred (similar to a Traditional IRA) until the child turns 18.
• At age 18, withdrawals may be used for education, a first home, starting a business, or retirement savings.
• Contributions won't begin until July 2026. However, you can get started now by using IRS Form 4546 to elect to establish the account. Beginning in mid-2026, you'll also be able to make this election online through trumpaccounts.gov.

Why this matters:

• It gives children a hands-on opportunity to build financial literacy and understand investing. The initial $1,000 contribution, growing at an average of 10% per year, could more than quintuple by the time your child turns 18 - a perfect way to demonstrate the magic of compound interest!
• The locked-in period ensures funds are used for long-term goals.

 

If you're already saving for your children through 529s or other vehicles, this may be a complementary tool.

 

I'd be happy to discuss what savings opportunities make the most sense for your financial picture. Please feel free to reply or call if you'd like to discuss how any of these updates fit into your plan for 2026.