2026 Changes to 401(k), IRA, Social Security Changes and More

There are a lot of changes coming for 2026 that will affect Cardinal employees like yourself, and I want to be sure you are prepared and have time to make adjustments should you desire to do so. I've separated these changes into defined groups to, hopefully, make finding what applies to you a little easier. Of course, if you have any questions about the changes below, please feel free to reach out anytime.

Contribution Limits for Retirement and Health Savings Accounts:

For Cardinal’s 401k plan, if you wish to maximize your contributions while spreading them evenly throughout the year, be sure to increase your contributions to be effective with your first paycheck in January 2026. In addition, new to 2026, employees aged 50+ who are covered by a 401(k), and whose W-2 earnings exceed $150,000 must designate their catch-up contributions as Roth contributions.  Many of you would have received a Cardinal email outlining this earlier this week. If you missed it, here is an excerpt:

Due to new IRS regulations from the Secure Act 2.0, effective Jan. 1, 2026, if you're age 50 or older and earned more than $150,000 in FICA wages in 2025, there’s a required change to voluntary 401(k) catch-up contributions. Here's what you need to know:

• If you choose to make voluntary 401(k) catch-up contributions, they must be made as Roth (after-tax) contributions.

• You can still choose between pre-tax and Roth options for your regular 401(k) deferrals. 

Next Steps:

• If you haven’t already, please log into your Principal account prior to 12/24 to update your Catch-up contributions from pre-tax to Roth to ensure you are following federal guidelines.  Please note that the amount entered in Principal is your desired per paycheck deduction.  Enter a bi-weekly deferral amount of at least $310 if you wish to reach the maximum Catch-up maximum of $8,000 by 12/31/26.

• Failure to act will result in an automatic conversion in 2026, and you will have additional taxes due when filing your 2026 tax returns.  Principal will reclass your pre-tax Catch-up to Roth and you will be issued a 1099-R in January 2027 to be filed with your 2026 tax return.
• If you have already updated your contributions, please disregard this email. 

If you’d like help understanding these changes, their impact on your tax or retirement situation, or setting the right contribution rates, please reach out by the end of next week.

Social Security Changes for 2026:

The income subject to Social Security taxes in 2026 will increase to $184,500, up from $176,100 in 2025.  This means many of you higher earners at Cardinal will have social security taxes withheld for an extra month or so to cover the increase.

For those who recently retired and are receiving Social Security the COLA for 2026 will be slightly higher, increasing by 2.8%.  If you’re interested in seeing all previous COLA amounts since 1975, you can click here.

A Couple Other Tax Notes and Changes:

To keep this note from getting too long, I’ll summarize a couple other notes and changes here:

• Income tax rates are unchanged for 2026, though the income thresholds are increasing.
• The standard deduction is increasing slightly to $32,200 for couples filing jointly and to $16,100 for single filers.

That's all for now. If anything here raises questions or concerns, please don’t hesitate to reach out! 

Take care and, as always, stay the course.