401k Rollover Retirement Planning: What to Do Before and After the Transition to Retirement
As retirement approaches, one of the most important financial decisions you’ll make is how to think about 401k rollover retirement planning. For many people, a 401(k) represents the largest pool of retirement savings they’ve built. How and when you contribute to it, and what you do with it when work ends, can shape your retirement income and tax situation for decades.
This article is designed to help you understand two sides of the equation:
- How to maximize planning opportunities while you’re still working, especially with new 2026 contribution limits
- How to evaluate rollover options thoughtfully, with an eye toward taxes, flexibility, and long-term goals
The goal is to help you approach 401k rollover retirement planning with a clear understanding of the new limits, and questions to consider as you speak with your financial advisor.
Why the Last Few Working Years Matter So Much
The final years before retirement often offer the greatest planning leverage. Contribution limits are higher, income may be at its peak, and retirement decisions are no longer abstract.
In the context of 401k rollover retirement planning, this window matters because:
- Contributions made now have fewer years to compound, but they often involve larger dollar amounts
- Tax decisions made now can influence income flexibility later
- Once assets are rolled out of a plan, some opportunities close while others open
Planning Perspective: The goal isn’t to “do everything” before retirement. It’s to make sure the most meaningful opportunities are considered before your 401(k) transitions.
401k Contribution Limits for 2026: What’s Changed and Why It Matters
The IRS adjusts contribution limits regularly, and 2026 brings meaningful increases, especially for those nearing retirement.
2026 401(k) Contribution Limits
- Employee salary deferral limit: $24,500
- Combined employee + employer contribution limit: $72,000
Catch-Up Contributions
- Age 50 or older: Additional $8,000
- Ages 60–63 (if plan allows): Up to $11,250 instead of the standard catch-up
That means:
- Individuals age 50+ can contribute up to $32,500
- Those ages 60 to 63 can contribute up to $35,750, if eligible
These higher limits can play an important role in 401k rollover retirement planning, particularly for those who want to strengthen their savings before leaving the workforce.
Catch-Up Contributions and the Roth Rule: An Important Detail for Higher Earners
One nuance that matters in 2026 is how catch-up contributions are treated for higher earners.
Catch-up contributions may be required to go into a Roth 401(k) rather than a pre-tax account, if income exceeds a specific wage threshold. That determination is based on:
- FICA wages from the prior calendar year
- The applicable wage threshold in effect for that year
For 2026 planning, this means 2025 wages are used to determine how contributions are treated.
Why does this matter for 401k rollover retirement planning?
Because Roth contributions change:
- When taxes are paid
- How future withdrawals are treated
- How rollover decisions may be evaluated later
Good question to discuss with your advisor:
How do Roth catch-up rules affect my current tax picture as well as my long-term retirement income strategy?
Beyond the Basics: After-Tax 401(k) Contributions for High Savers
Some workplace plans allow after-tax 401(k) contributions, which are different from Roth contributions.
Here’s how they work:
- Contributions are made after taxes
- Investment growth is tax-deferred while in the plan
- Total contributions (employee + employer + after-tax) cannot exceed $72,000 in 2026
Not all plans allow this feature, and the planning implications vary widely. But for higher earners, after-tax contributions can sometimes extend saving opportunities within employer plans—making them another factor to weigh in 401k rollover retirement planning.
Coordinating Other Tax-Advantaged Accounts Before Retirement
While the 401(k) is often the centerpiece, effective 401k rollover retirement planning looks at how all retirement-oriented accounts work together. Coordinating these accounts works to your benefit.
This may include:
- Roth IRAs, which have separate contribution limits and income considerations
- Health Savings Accounts (HSAs), which offer tax advantages when used for qualified medical expenses
- Understanding how contribution timing and account types interact with future withdrawals
When a Rollover Becomes Real: Options to Understand
For some, rollover decisions are still years away. For others, they’re immediate, triggered by retirement, a job change, or a buyout. Either way, understanding the options is central to 401k rollover retirement planning.
Common paths include:
- Leaving assets in the existing employer plan
- Rolling over to a Traditional IRA
- Rolling over to a Roth IRA
Each option comes with tradeoffs related to:
- Taxes
- Investment flexibility
- Long-term income planning
Common Rollover Mistake: Treating a rollover as a one-time transaction instead of part of an ongoing retirement plan.
Timing and Structure Impact the Taxes You Pay
Taxes are often the most misunderstood part of 401k rollover retirement planning.
Key considerations include:
- Whether taxes are paid now or deferred
- How future withdrawals may be taxed
- How rollovers interact with required distributions later in retirement
Importantly, the goal is rarely to pay the least tax this year. Instead, it’s to manage taxes thoughtfully over time—balancing today’s impact with tomorrow’s flexibility.
How a Fiduciary Advisor Helps Support Your Decision Making
A fiduciary approach to 401k rollover retirement planning focuses on the process and alignment with your goals instead of products.
A fiduciary approach means:
- Acting in a client’s best interest
- Clarifying goals before making moves
- Coordinating rollover decisions with income planning, tax strategy, and long-term priorities
For many people, these conversations provide reassurance—not because there’s one “right” answer, but because decisions are made with context and care for the future you envision.
Key Takeaways for 401k Rollover Retirement Planning
- Contribution limits are higher in 2026, creating meaningful planning opportunities
- Catch-up contributions now involve more nuance, especially for higher earners
- After-tax and Roth features can affect how rollovers are evaluated later
- Rollover decisions influence taxes and income long after retirement begins
- Thoughtful 401k rollover retirement planning is about coordination, not urgency
This article is for educational purposes only. Retirement and tax decisions vary based on individual circumstances and should be reviewed with a qualified financial advisor.
