Cole Stoneman: Hey, everyone. I'm glad you're here, because today we are getting into something that affects a huge number of retirement savers, educators, healthcare workers, nonprofit employees, really everyone in 403(b) plans, 401(k)s, anyone sitting in retirement plans will be affected. In 2026, this is the year you need to pay attention to. The rules changed, the limits changed. And one particular change is going to hit high earners in a way that a lot of people are not prepared for. We're going to cover all of it in the next 10 minutes, including a conversation about the Savers Credit that most people overlook entirely.

Let's start with the numbers. For 2026 ,the standard employee deferral limit in a 403(b) has increased to $24,500, up from $23,500 last year. Small move, but meaningful over time. Now, the catch-up contribution story is where it gets more interesting. If you are 50 to 59 years old or 64 and older, you can contribute an additional $8,000 beyond the standard limit, bringing your total to $32,500

But here's something I want you to pay close attention to if you're between the ages of 60 and 63 right now, SECURE 2.0 created what I call the Super Catch-up Window for exactly that age group. Instead of the standard $8,000 catch-up, you get $11,250. That brings your total employee contribution ceiling to $35,750 this year. That is a serious number. And this window closes the moment you hit 64. So if you are 60, 61, 62, or 63 right now, use it.

Here's the biggest change of 2026, the one I really want you to hear and pay attention to. Starting this year, if you earned more than $145,000 in FICA wages from your employer in 2025, that threshold adjusts to $150,000 when applied in 2026. Your catch-up contributions must be made as Roth, not pre-tax or after tax. The contributions must be made as Roth. This is a SECURE 2.0 provision that was originally slated for 2024, but got delayed and is now fully in effect. It applies to 401(k)s, 403(b)s alike, and it affects a significant number of 403(b) participants in our hospital—maybe senior nurses, hospital physicians, executive team. If you're pulling in six-figure W2 income of 145,000 last year and you are making a catch-up contribution in your 403(b), your tax treatment just changed.

Now, one important note for This is, if you were working at another institution, you worked for yourself last year, this catch-up does not pertain to you. So for instance, if you were a physician and you came in, started to work with San Juan Regional in February of this year, you could still do the full catch-up contribution in the pre-tax manner, you are not forced to go into the Roth contribution side of things. So once again, if you came into the hospital, worked somewhere else last year, you made $145,000, this does not pertain to you for this year. This will be your last year that you can contribute everything in a pre-tax manner.

So, here's what that actually means in practice. A pre-tax contribution reduces your taxable income today. So for instance, you made $200,000, you contributed $20,000. for tax purposes, it would show that you made $180,000. So, it takes down your marginal dollars on the tax side down proportionately to what you contributed.

A Roth catch-up does not. You pay income tax on that money now. It goes into the account after tax and it grows and comes out tax free in retirement. Additionally, it goes to your heirs tax free as well. The question is whether that trade off works in your favor. And for people in peak earning years sitting in a top bracket who expected to be in a lower bracket in retirement, this disrupts a long-standing planning strategy that we've used for many of you in the past.

Now, Roth is not bad. For some people, it's actually the better outcome. If you are going to be in a high bracket throughout retirement, maybe even the same bracket in retirement, paying the tax now and getting tax free growth can absolutely be a win. But the problem is the choice is being removed. High earners no longer get to decide. The IRS has decided for them.

So, I want to shift gears just a bit here, because not every 403(b) participant is a high earner. And there's a tax benefit that moderate income workers are consistently leaving on the table—the Savers Credit. The Savers Credit officially called the retirement savings contributions credit is a non-refundable tax credit worth up to a thousand dollars for individuals, or $2000 for married couples filing jointly.

Now, a credit and a deduction, what's better? A credit is much better than a deduction. Credit is simply saying, for taxes, "I owed $10,000 in taxes" or "I paid $10,000 in taxes." A credit, if you received a $2,000 credit, if you're married, filing joint, it would say, "You don't owe 10,000," or "If you pay 10,000, you're not going to have to pay that $10,000. You'll only have to pay $8000. So, It reduces that tax liability proportionately.

So, going back to the credit, you earn it by making contributions to an eligible retirement account, so your 403(b). Rollovers, employer matches, they don't count towards this credit. It has to be new money going in to your 403(b) plan. For 2026, the income limits are $80,500 for married couples filing jointly, $60,375 for heads of households, and $40,250 for single filers. If you're under those thresholds and you're contributing to a retirement plan, you may qualify. The credit comes out in three tiers, 50%, 20%, and 10% of your first $2000 in contributions. So based on where your adjusted gross income falls, at the 50% tier, a $2,000 contribution generates a $1000 tax credit. That's a dollar for dollar reduction in what you owe the IRS. Combined with the pre-tax deduction benefit of a traditional contribution, the effective cost of saving can be quite low.

Here's the headline though, the Savers Credit has one year left. So beginning in 2027, SECURE 2.0 replaces it with the Savers Match, a direct government contribution deposited into your retirement account. So, 50 cents for every dollar you contribute up to a thousand dollars government match. The income thresholds are different—$71,000 for joint filers, $53,250 for heads of households, $35,000 for single filers with phase-outs leading up to those numbers.

The practical application for 2026, this is your last chance to use this credit in its current form. If your AGI is near those qualifying thresholds that I spoke earlier about, pre-tax contributions to your 403(b) reduce your adjustable gross income. And that could push you into a qualifying tier or a better tier potentially. So, it's worth running the numbers before year end. Even if you haven't filed your taxes for 2025, you still have this potential option to file for that Savers Credit.

All right, let's land the plane here for 2026. Your base 403(b) limit is $24,500. If your 60 to 63, max the super catch-up, you get $35,750. If you earned over $145,000 last year and you're making catch-up contributions, they're Roth now. This does happen automatically. There's nothing that you need to do. The Workday system will automatically adjust that through the payroll feed over to Lincoln. So, there is nothing that you need to do. If your income is under $80,500 as a joint filer. Check whether you qualify for the Savers Credit before the year ends because 2026, once again, it's your last year to do so.

So, these are not abstract rule changes. They directly affect your paycheck, your tax bill, and your retirement outcome. Come talk to us. We can run the numbers and make sure your strategy reflects the 2026 landscape, not last year's.

So, thanks for spending a few minutes with us, about 10 minutes. If this is useful, share it with someone. As always, nothing here is individual tax or financial advice. Work with a qualified professional on your specific situation, and I'll see you next time.