Nearly $1 Trillion Is Expected to Roll Out of 401(k)s This Year. At 61, He Has a Bigger Savings Window Before He Leaves.
A short window lets certain workers funnel thousands more into a 401(k) than their colleagues can, but the eligibility rules hinge on a calendar quirk that catches many people off guard before they even realize the opportunity has closed.
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
Americans are moving enormous sums out of workplace retirement plans as they leave jobs and retire. Nearly 6 million people rolled workplace-plan money into IRAs in 2023, and Cerulli Associates estimates about $941 billion could make the trip in 2026.
For a 61-year-old still collecting a paycheck, there is a reason not to mentally check out of the 401(k) just yet. He may be in the middle of a short savings window that exists only for workers who turn 60, 61, 62 or 63 during the year. In 2026, that gap lets an eligible worker put as much as $35,750 into a 401(k), thousands more than the limit available to most workers over 50. Then it disappears. And the calendar is less forgiving than his birthday might suggest.
Four Calendar Years Get the Bigger Limit
The regular 401(k) elective-deferral limit is $24,500 in 2026. Workers age 50 and older can generally add an $8,000 catch-up contribution, bringing the potential total to $32,500. For workers in the enhanced catch-up window, that extra contribution rises to $11,250, pushing the potential employee total to $35,750.
The catch is how the age rule works. Eligibility is based on the age the worker reaches during the calendar year. A man who starts 2026 at 63 but turns 64 in November does not get the enhanced limit for 2026. His final eligible year was 2025, when he turned 63. The bigger window lasts only for the four years in which a worker turns 60 through 63. And even then, the plan has to offer it.
The Extra Room Can Help Build a Social Security Bridge
The difference between the normal age-50 catch-up and the enhanced catch-up is $3,250 in 2026. That may not sound enormous in isolation. Over four eligible years, however, it represents up to $13,000 of additional contributions before investment returns. For someone nearing retirement, that money can serve another purpose: giving him more room to choose when to claim Social Security. A worker born in 1960 or later can claim at 62, but doing so can reduce his retirement benefit by as much as 30% compared with waiting until full retirement age (FRA) at 67.
Waiting beyond 67 increases the benefit further, up to age 70. The worker with enough savings to cover expenses for another year or two has more freedom to delay claiming. The worker without that cushion may have fewer choices (we condensed the 62 versus 67 versus 70 math onto a single page in a free claiming framework if you want to see the tradeoffs side by side). At a hypothetical 6% annual return, investing just the additional $3,250 allowed by the enhanced catch-up each year for four years could grow to roughly $14,650 by the end of that period.
High Earners Get One More 2026 Twist
This year added another layer. For 2026, workers whose 2025 FICA wages from the sponsoring employer exceeded $150,000 generally must make their catch-up contributions as Roth contributions rather than pretax contributions. The money still goes into the retirement account, but the immediate tax treatment changes. Traditional 401(k) deferrals also remain subject to Social Security payroll tax. Putting more into the plan does not reduce the covered wages recorded for Social Security purposes.
Use the Window While the Paychecks Still Exist
Before leaving work or assuming there is always another contribution year ahead, three details are worth checking.
- Find out whether the plan offers the enhanced catch-up. Not every plan does.
- Check which calendar year is the last eligible one. The enhanced limit applies in years a worker turns 60 through 63, not the year he turns 64.
- Check whether the catch-up must be Roth. For some higher earners, 2026 changed the tax treatment even though the higher savings limit remains available.
Hundreds of billions of dollars are heading out of 401(k)s as workers retire. For someone still earning a paycheck at 60, 61, 62 or 63, there may be one last reason to put more money in before joining them.
Contact [email protected] for any questions or corrections.
Gerelyn Terzo is the author of dividend investing handbook "Dividend Investing Strategies: How to Have Your Cake & Eat It Too." A veteran financial journalist, she covers agri-finance for outlets like Global AgInvesting and the broader stock market and personal finance for 24/7 Wall Street. She began at CNBC and later helped launch Fox Business in New York. Gerelyn currently resides in Woodland Park, Colorado and dabbles in nature photography as a hobby.
