TRANSCRIPT
Speech-to-text transcription can look a little quirky. Please excuse any grammar or spelling errors.
#91 - 2026 Retirement Contributions Explained: How to Prioritize Accounts & Help Reduce Lifetime Taxes
Eric Blake: If you feel like you are behind on your retirement savings, or you are just trying to get something started, get something started. Do not feel like you have to put the maximum amount into every type of account or whatever accounts you might have available to you. One of the practical things you can think about is taking advantage of auto-enrollment features.
A lot of 401(k) plans offer these now, or auto-increase options where, even if you just start, it will automatically increase you by 1% the following year, or whatever increments may be established by your plan.
Eric Blake: Welcome to another episode of the Simply Retirement Podcast, where we want to empower and educate women to live your retirement on your terms. I am your host, Eric Blake, a practicing retirement planner with over 25 years of experience, founder of Blake Wealth Management, and I would not be the man I am today without the women in my life.
Joining me once again is Wendy McConnell. Wendy, how are you?
Wendy McConnell: I am good. How are you?
Eric Blake: I am very well. I wanted to share with the audience that the first time you and I actually got to meet in person happened just recently, about a week ago.
Wendy McConnell: Yes.
Eric Blake: It was awesome getting to meet you and your sister and just getting a chance to chat about everyday life. It was really cool.
Wendy McConnell: Yeah. Well, I mean, of course it was. It is me.
Eric Blake: I am fine. You were there. That is all that matters.
Wendy McConnell: I am delightful. No, it was very, very nice to meet you and your wife, and it was a great little get-together. Thank you for making yourself available.
Eric Blake: Even though you and your sister both had Philadelphia Eagles shirts on.
We let you pass with that.
Wendy McConnell: When I was coming, when I was in the airport, when I was leaving, somebody went, “Yo, Eagles fan, you want to sign up for this?” I was like, “No, I am good. Thanks.” It was a running theme throughout my trip to Texas, but thank you for having us.
Eric Blake: Yeah, it was great to see you again in person. We are approaching the three-year mark, so this is the first time we have actually gotten a chance to meet in person after almost three years of working together here. Very cool.
On today’s episode, we are going to be talking about the 2026 retirement plan contribution rules, including how much you can contribute to different types of accounts like 401(k)s and IRAs, but also how to think about prioritizing which accounts to use if you may be funding more than one type of account, or if you are not able to contribute the maximum to each option.
We will also talk about what choices may still be available even if you are not currently working or you do not have earned income. As always, for all the links and resources for this episode, please visit thesimplyretirementpodcast.com. And do not forget, if you have a question, topic idea, or specific retirement challenge you would like to hear covered on an upcoming episode, you can visit thesimplyretirementpodcast.com/askeric.
With all that out of the way, I want to start with the actual numbers for 2026, because this really builds on everything else.
If you are contributing to a workplace retirement plan, such as a 401(k), 403(b), or 457, the base contribution is up to $24,500 this year.
Wendy McConnell: Okay.
Eric Blake: If you are over age 50, you have what is called a catch-up contribution. This year, it is $8,000, so a total of up to $32,500 if you are over age 50.
There is also something relatively new. 2025 was the first year this was in effect, introduced as part of SECURE Act 2.0. Many people are still not aware of it. If you are between ages 60 and 63, there is an enhanced catch-up contribution of up to $11,250. It is not in addition to the $8,000; it replaces it. So if you are 60, 61, 62, or 63, you can contribute $11,250 on top of the $24,500.
Wendy McConnell: Yeah.
Eric Blake: For IRAs, including both traditional and Roth accounts, the 2026 contribution limit is $7,500 for everyone, with an additional $1,100 catch-up if you are over age 50, for a total of $8,600. There is no enhanced catch-up for IRAs.
Wendy McConnell: Yeah.
Eric Blake: A key point with IRAs and Roths is that you must have earned income to cover the contribution amount. If you want to contribute $7,500, you need at least $7,500 in earned income. That could be W-2 income or self-employment income, but it must be earned income. Distributions, rental income, and similar sources do not count.
Wendy McConnell: Any particular reason why?
Eric Blake: The idea behind IRAs and 401(k)s is to save for retirement during your working years. That earned component is what allows you to make those contributions.
Wendy McConnell: Okay, good enough.
Eric Blake: One important reminder: because this episode is being released before April 15, 2026, you may still be able to make IRA or Roth contributions for the 2025 tax year, depending on your situation. Be sure to talk with your tax or financial advisor before that deadline.
These numbers represent maximums, not requirements. You can always contribute less. Retirement planning is about progress, not perfection.
If you feel behind, just get something started. Do not feel like you have to max out everything. Take advantage of auto-enrollment or auto-increase features, which can help you gradually increase savings over time without constant decision-making.
Wendy McConnell: Yeah. I hear advice about taking advantage of catch-up years, but I do not have an extra $30,000 a year to put into savings.
Eric Blake: That is why it is important to understand the limits, but also that you do not have to contribute the full amount. For many women over 55, this stage of life represents both a transition toward retirement and often the highest earning years.
Wendy McConnell: Mm-hmm.
Eric Blake: Understanding these limits becomes important because you may finally have the capacity to save more.
Wendy McConnell: So you are not saying every extra dollar should go into catch-ups?
Eric Blake: No. It always comes back to planning. One concept I talk about is a one-third, one-third, one-third approach. If you get a bonus or raise, one-third goes to savings, one-third to taxes, and one-third to enjoyment. It helps you reward yourself while still making progress.
Wendy McConnell: Okay.
Eric Blake: That could also mean increasing savings by 1% or 2%.
Wendy McConnell: Sounds good.
Eric Blake: Let’s talk about prioritization. In general, you want to prioritize accounts based on whether you believe you are in a higher or lower tax bracket today than you expect to be in the future. The goal is simple: pay tax at the lower rate.
With Roth accounts, you pay tax now, but qualified withdrawals are tax-free later. With traditional accounts, you get a tax benefit now, but pay tax later.
A common approach is this: first, contribute enough to your 401(k) to get the full employer match. That match is essentially free money.
A common misconception is that if your employer does not match, you should not contribute. That is not necessarily true. If you are a higher earner, contributing may still significantly reduce your taxable income.
Once you have the match, consider contributing to a Roth IRA if you are eligible. If your income is too high, a backdoor Roth may be an option.
From there, decisions depend on income level. Higher earners may continue maxing out the 401(k). Others may prefer a taxable brokerage account for flexibility, since there are no age restrictions on withdrawals.
Wendy McConnell: Okay.
Eric Blake: After core retirement savings are addressed, you can focus on other goals, like retiring before age 59½ or funding education through 529 plans.
Now let’s talk about tax planning. With current tax brackets extended, we have more clarity for the next few years. If you are in the 12% tax bracket or lower, Roth contributions often make sense. If you are in the 32% bracket or higher, pre-tax contributions may be more attractive.
The tricky area is the 22% to 24% brackets. Many people fall there, and this is where planning really matters.
Wendy McConnell: I was always told my tax bracket would be lower in retirement.
Eric Blake: That is not always true. Many people maintain a similar lifestyle in retirement, which means similar taxes. This is why tax projections matter.
A key new rule for 2026: if your prior-year wages were $150,000 or more, any 401(k) catch-up contributions must be Roth contributions. You can still make them, but they are now taxable.
Wendy McConnell: I do not like that.
Eric Blake: I get it. From the government’s perspective, it increases tax revenue. From your perspective, that money grows tax-free for life.
Wendy McConnell: I do like that part.
Eric Blake: You have to look at it optimistically.
Wendy McConnell: I will leave that to you.
Eric Blake: Now let’s talk about a situation common for women 55 and older. You may have stepped out of the workforce for caregiving and do not have earned income. That does not automatically mean retirement contributions are impossible.
This is where spousal IRA rules come in. As long as one spouse has earned income and you file jointly, that income can qualify both spouses for IRA or Roth contributions.
This can help keep retirement savings on track and diversify assets, especially into Roth accounts.
Wendy McConnell: Yeah, put it all in the Roth.
Eric Blake: Tax-free is tax-free.
Wendy McConnell: Exactly.
Eric Blake: Putting it all together, the 2026 contribution limits offer meaningful opportunities, especially during higher earning and transition years. Understanding the rules, including new SECURE Act 2.0 provisions, can help you make better decisions.
We will include a link to our 2026 Tax and Retirement Planning Cheat Sheet, a simple two-page reference for key numbers.
Wendy McConnell: Okay.
Eric Blake: Got all that?
Wendy McConnell: I do.
Eric Blake: Awesome.
Wendy McConnell: Do not quiz me.
Eric Blake: I will just send you the cheat sheet.
Wendy McConnell: I like that.
Eric Blake: As always, thank you for tuning in. Wendy, thank you for being here. If you would like help thinking through which accounts to prioritize and how contributions fit into your tax picture, you can learn more and schedule a call at getmysimplyretirementroadmap.com.
For all links and resources mentioned today, visit thesimplyretirementpodcast.com.
Until next time, remember: retirement is not the end of the road. It is the start of a new journey.
Content here is for illustrative purposes and general information only. It is not legal, tax, or individualized financial advice; nor is it a recommendation to buy, sell, or hold any specific security, or engage in any specific trading strategy.
All investing involves risk including loss of principal. Results will vary. Past performance is no indication of future results or success. Market conditions change continuously.
Information here is provided, in part, by third-party sources. These sources are generally deemed to be reliable; however, neither Blake Wealth Management nor RFG Advisory guarantee the accuracy of third-party sources. The views expressed here are those of Blake Wealth Management. They do not necessarily represent those of RFG Advisory, their employees, or their clients.
This commentary should not be regarded as a description of advisory services provided by Blake Wealth Management or RFG Advisory, or performance returns of any client. The views reflected in the commentary are subject to change at any time without notice.