Thu Nov 20 11:00:00 UTC 2025: Okay, here’s a summary and a news article based on the provided text:

Summary:

New IRS regulations, set to take effect in 2026, introduce an income test for 401(k) catch-up contributions for those over 50. If your income from your employer exceeded $145,000 in the previous year, you’ll only be able to make catch-up contributions to a Roth 401(k) plan. This change impacts higher-income earners by introducing an upfront tax burden. While most employers offer Roth 401(k) plans, individuals should confirm with their employer and seek financial advice to understand the implications. The article also touches on alternative investment strategies for high-income earners, such as commercial real estate, and financial advisory services like Advisor.com and Range.

News Article:

IRS Rule Change to Impact High-Earning 401(k) Savers

A new IRS regulation is set to change how high-income, middle-aged Americans contribute to their 401(k)s, starting in 2026. The new rule introduces an income test for those over 50 making “catch-up” contributions.

Currently, workers over 50 can contribute an additional amount to their 401(k)s beyond the standard limit. For 2025 the standard limit is $23,500. However, under the new rule, if an individual earned more than $145,000 from their employer in the previous year, their catch-up contributions must be made to a Roth 401(k) plan. This means the contributions will be made with after-tax dollars, eliminating the immediate tax deduction that comes with a traditional 401(k).

“This adds an upfront tax burden for high-income earners,” experts warn. According to data, a significant portion of Americans aged 45-54 earn over $100,000 annually, meaning millions could be affected by this change.

While the change may seem small, the upfront tax is expected to reduce people’s ability to invest.

Taxpayers affected by this change are urged to contact their employers to confirm the availability of Roth 401(k) plans, as well as seek financial advice to navigate the new regulations and explore alternative retirement savings strategies.

Financial advisors recommend high-income earners consider options like commercial real estate investments and working with financial planners that specialize in high income households.

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