401(k) Basics: Limits, Matching and Vesting for 2026
The employer match is the highest guaranteed return available to most working Americans, and it is routinely left on the table.
At a glance
Figures checked 1 Sep 2026
What to take away
- For 2026 you can defer $24,500, plus $8,000 if you are 50 or older, for a total of $32,500.
- If you turn 60 to 63 during 2026 the catch-up is $11,250 instead, for $35,750 total.
- Total additions from all sources are capped at $72,000 for 2026.
- From 2026, catch-up contributions must be Roth if your prior-year wages with that employer exceeded $150,000.
A 401(k) is an employer-sponsored retirement plan funded by payroll deferrals, often with an employer contribution on top. The tax treatment, the match and the fund menu are the three things that decide how well it works for you.
The 2026 numbers
| Limit | Amount |
|---|---|
| Employee elective deferral | $24,500 |
| Catch-up, age 50+ | $8,000 |
| Catch-up, age 60–63 | $11,250 |
| Total employee + employer additions | $72,000 |
Capturing the match
A typical formula is 50% of your contributions up to 6% of pay, or dollar-for-dollar up to 3% or 4%. Whatever the shape, contribute at least enough to collect all of it. A 50% match is an immediate 50% return on that money, before any investment growth.
On an $85,000 salary, a dollar-for-dollar match up to 4% is $3,400 a year. Missed for ten years and compounded at 7%, that is over $47,000 of foregone balance.
Vesting
Your own contributions are always yours. Employer contributions may vest on a cliff schedule, often three years, or gradually over up to six. Leaving before you vest forfeits the unvested portion, which is worth checking before resigning.
The new Roth catch-up rule
Starting in 2026, if your prior-year Social Security wages with the plan sponsor exceeded $150,000, any age-based catch-up contribution has to go in as Roth rather than pre-tax. If your plan has no Roth option, it may not be able to offer catch-up contributions at all.
Choosing funds from a limited menu
Most plans contain one or two sensible options and a lot of noise. Look for a broad US index fund, an international index fund and a bond index fund, or a low-cost target-date fund. Sort the menu by expense ratio and start from the bottom.
Check your plan’s fee disclosure for administration charges layered on top of fund expenses. A plan charging 0.75% in administration can make an otherwise cheap fund expensive.
Common questions
Traditional if you expect a lower tax rate in retirement than today; Roth if you expect a higher one or want tax diversification. Early-career savers often lean Roth because their current rate is low.
You can leave it, roll it to the new employer's plan, or roll it to an IRA. Compare fees and fund quality — a good institutional plan sometimes beats an IRA.
Yes. The limits are separate, though your traditional IRA deduction may phase out depending on income.