New 401(k) Rules for 2025: More Changes for Ages 50+

Watercolor painting of Dingle Peninsula in Ireland by Cass Grange

October 2025

Greetings!

If you will be age 50 by the end of 2026, the coming year brings important—and positive—changes to your 401(k). The SECURE 2.0 Act expands contribution limits and adds new flexibility for late-career savers. Now is the time to understand what’s changing and how to take advantage.

Projected 2026 Contribution Limits (unofficial)

· Standard 401(k) limit: $24,500

· Age 50+ catch-up: $8,000

· Total possible: $32,500

For those ages 60–63, there’s a new “super” catch-up, which was first available in 2025. It’s expected to be $11,500 for 2026 (instead of $8,000).

That means you could contribute up to $35,000 in 2026 if you are 60-63.

New Roth Catch-Up Rule Restrictions for high earners:

If your W-2 income was over $145,000 in 2025 your 2026 catch-up contributions will need to go into a Roth 401(k).

You’ll pay taxes now, but your withdrawals in retirement will be tax-free.

If you do not have a Roth option in your 401(k) plan, you will not be able to use the catch-up contribution.[1]

Time to Review Your Plan

Now’s the time to:

· Review your 401(k) contribution level

· Check if your plan allows Roth catch-ups

· Maximize your savings before retirement

Let’s Make a Plan Together

At Watercolor Financial, we help clients make sense of changing retirement laws and turn them into opportunities for smarter savings. Click here to set up a time to talk.

Have a great Halloween!

Cass , Megan, and Bleckley

[1] https://www.wsj.com/personal-finance/retirement/high-earners-age-50-and-older-are-about-to-lose-a-major-401-k-tax-break-75572091?st=yE77Km

Watercolor Wins!

Longtime clients Jill and Steve joined Bleckley and Sharon Dobbs to support the Austin FC Major League Soccer team at their recent match against Nashville in the final of the US Open Cup, held at Q2 Stadium in Austin. Jill and Steve are passionate fans who helped paint and raise the "tifo" banner at the start of the match! ¡Listo Verde!

About the Letter and Email

from Capital Group

Most of our clients received a letter in the mail two weeks ago from Capital Group/American Funds/Computershare. It had the headline ACTION NEEDED and asked you, as a shareholder, to call the toll-free number. The wording was unclear, but we want to assure you that this was not spam. This was from Capital Group/American Funds. Many of our clients own the Bond Fund of America, and they are asking shareholders to vote on a change to lower the internal fees on that fund. They have also sent emails asking for your vote. This may be easier than calling the toll-free number. It is your decision on whether you vote, and how you vote. We wanted you to know this was a legitimate mailing. When you click on the email from FIDELITY INVESTMENTS: Subject: Your vote is missing. Please vote now When you click on "Go to Proxyvote.com" you will see the page below. The yellowed circled areas are where you need to vote on this proposed amendment.

Access your reports - Visit our web page for links to Fidelity (for access to statements and tax documents) and to the Orion portal (for access to performance reports and billing statements): Watercolor Financial website.

Q4 2025: Quarterly Market Guide

Please review this quarter's market guide by clicking here. We encourage all of our clients to review the market guide written by Rafael Villagran, CIO of Genesia Investments and investment consultant for Watercolor Financial.

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