What is the maximum I can contribute to a 401(k) in 2026?

For 2026, the maximum employee contribution (elective deferral) to a 401(k) is expected to be $23,000. If you are age 50 or older, you can contribute an additional $7,500 catch-up contribution, bringing your total to $30,500.

Should I choose a Traditional 401(k) or a Roth 401(k)?

The choice depends on your current and expected future tax bracket. If you believe you're in a higher tax bracket now than you will be in retirement, a Traditional 401(k) (pre-tax contributions) is generally better. If you expect to be in a higher tax bracket in retirement, a Roth 401(k) (after-tax contributions, tax-free withdrawals) is often more advantageous.

What happens to my 401(k) if I change jobs?

When you change jobs, you typically have options: leave the money in your old 401(k), roll it over into your new employer's 401(k), or roll it over into an Individual Retirement Account (IRA). Cashing it out is generally not recommended due to taxes and penalties.

What is a 401(k) employer match?

An employer match is when your company contributes money to your 401(k) based on a percentage of your contributions. For example, they might match 50% of the first 6% of your salary you contribute. It's essentially free money and you should always contribute at least enough to get the full match.

How often should I review my 401(k) investments?

It's a good practice to review your 401(k) investments and asset allocation at least once a year, or whenever there's a significant life event (e.g., marriage, birth of a child, job change). This ensures your portfolio remains aligned with your risk tolerance and retirement goals.

Can I take money out of my 401(k) before retirement?

Yes, but it's generally not advisable. Early withdrawals before age 59½ are typically subject to ordinary income tax and a 10% early withdrawal penalty, with limited exceptions. Some plans also allow loans or hardship withdrawals, but these also have significant drawbacks.

What are Required Minimum Distributions (RMDs)?

Required Minimum Distributions (RMDs) are mandatory withdrawals you must start taking from your traditional 401(k) (and Traditional IRAs) once you reach a certain age, currently 73. These distributions are taxed as ordinary income, and failing to take them can result in substantial penalties.

401(k) Retirement Guide: Maximize Savings | One Percent…