New Update: Healthcare Costs Increasing by Over 60% in Some States. Will you be impacted?

Aetna Employees Earning $150K+: New Roth Catch-Up Rules Begin in 2026

Healthcare Provider Update: Healthcare Provider Information for Aetna Aetna, part of the CVS Health family, has been a key player in the Affordable Care Act (ACA) marketplace, providing health insurance plans to individuals and families. However, significant changes are on the horizon for 2026, as Aetna will exit the ACA marketplace in 17 states, impacting approximately 1 million members. This withdrawal is attributed to the company's challenges in maintaining competitiveness and providing value in a rapidly evolving healthcare landscape. Potential Healthcare Cost Increases in 2026 As the healthcare landscape shifts, substantial premium hikes are anticipated for those enrolled in ACA marketplace plans, with projections of up to 75% increases in out-of-pocket costs due to the potential loss of enhanced federal subsidies. In some states, insurers have filed for rate increases exceeding 60%, driven by surging medical costs and the expiration of premium tax credits established under the American Rescue Plan. For Aetna's former members, this change further complicates their healthcare landscape as they seek new insurance options amid heightened financial pressures. Click here to learn more

'With mandatory Roth catch-up contributions beginning in 2026 for higher earners, Aetna employees should take a coordinated approach to their 401(k), HSA, and IRA strategies to align income, timing, and long-term retirement goals,' – Wesley Boudreaux, a representative of The Retirement Group, a division of Wealth Enhancement.

'As Roth catch-up rules reshape contribution strategies for higher earners in 2026, Aetna employees should revisit how their workplace plans, HSAs, and IRA options fit together within a broader retirement framework,' – Patrick Ray, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

(1) How the SECURE 2.0 Act changed catch-up contribution rules beginning in 2026.

(2) What mandatory Roth treatment for higher earners means for workplace retirement planning.

(3) Additional tax-advantaged strategies Aetna employees may want to review as part of a broader retirement planning approach.

The way some higher-income employees make catch-up contributions to their employer retirement plans has changed beginning in 2026. This may directly impact many Aetna employees who are age 50 or older and earning above certain compensation thresholds.

Several legislative provisions that broaden or mandate Roth treatment in specific situations—such as requiring Roth catch-up contributions for certain higher earners—were included in the SECURE 2.0 Act of 2022 (Division T of the Consolidated Appropriations Act, 2023).

The IRS has issued guidance clarifying the implementation timeline and wage threshold under Section 603 of SECURE 2.0.

What Is the New Rule Regarding Catch-Up Contributions to 401(k)s?

If you are age 50 or older and your prior year Federal Insurance Contributions Act (FICA) wages from the employer sponsoring your retirement plan exceed the applicable threshold, your catch-up contributions must now be made as Roth contributions.

For 2026 catch-up treatment purposes, the threshold is based on 2025 FICA wages exceeding $150,000 (indexed for inflation in future years). ¹

Roth 401(k) contributions are made with after-tax dollars, meaning they are not deductible in the current tax year. However, if eligible Roth 401(k) distributions are taken after the five-year holding period and after age 59½, due to disability, or after death, those distributions are generally tax-free.

2026 Contribution and Catch-Up Amounts

2026 Limits: ²

- Employee elective deferral limit: $24,500
- Catch-up (age 50+): $7,500
- Catch-up (age 60–63): $11,250 (if permitted by the plan)

The total annual defined contribution limit (employee + employer contributions) for 2026 will be $72,000, excluding catch-up contributions.

If 2025 FICA wages exceed $150,000, 2026 catch-up contributions must be made on a Roth basis.

Under current law, this Roth catch-up requirement is a statutory change that does not expire unless amended by Congress.

Plans that do not offer designated Roth contributions may be unable to allow catch-up contributions once the IRS transition period concludes, which generally began in 2026.

If prior year FICA wages are below the threshold, the required Roth rule does not apply.

Other Factors to Consider When Planning for Retirement

If the catch-up rule change affects your strategy, it may be worth reviewing other tax-advantaged options available to Aetna employees.

1. Consider a Health Savings Account (HSA)

If enrolled in an HSA-eligible health plan, an HSA offers several tax features:

Contributions are not subject to federal income tax.
Earnings grow tax-free.
Withdrawals for qualified medical expenses are tax-free.

Contributions made through payroll deduction are generally not subject to FICA or FUTA taxes.

After age 65, HSA funds may be used for non-medical expenses without penalty, though withdrawals are taxed as ordinary income.

HSA Contribution Limits

2026: ³

- $4,400 (individual)
- $8,750 (family)

Individuals age 55 or older who are not enrolled in Medicare may contribute an additional $1,000 catch-up amount.
2. Increase Regular 401(k) Contributions

The employee elective deferral limit increases to $24,500 in 2026.

This limit applies only to employee contributions and does not include employer matching contributions.

3. Review Partial Roth IRA Contributions

Eligibility for Roth IRA contributions is based on modified adjusted gross income (MAGI).

2026 Phase-Out Ranges: ²
Single: $153,000 to $168,000

Married filing jointly: $242,000 to $252,000
Direct Roth IRA contributions are not permitted above the upper phase-out limit. Contributions for a prior tax year may generally be made up until the tax filing deadline of the following year.

Roth 401(k)s and Roth IRAs each have separate five-year aging requirements for qualified distributions.

4. Review a Traditional IRA

For 2026, the IRA contribution limit is $7,500, with a $1,100 catch-up for those age 50 or older.

Even if participating in a workplace retirement plan, non-deductible contributions may still be made to a traditional IRA up to the annual limit. Earnings grow tax-deferred, though non-deductible contributions do not reduce current taxable income.

5. Consider a “Backdoor” Roth IRA Strategy

A “backdoor” Roth IRA involves making a non-deductible contribution to a traditional IRA and then converting it to a Roth IRA.

Owning other traditional IRAs with pre-tax assets can affect the tax treatment of conversions due to pro-rata rules.

Converted Roth amounts must meet a separate five-year aging rule to avoid certain penalties.

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Why Professional Guidance Matters for Aetna Employees

Changes to catch-up contribution rules and shifting contribution limits can influence long-term retirement planning decisions. Coordinating 401(k) contributions, IRAs, HSAs, and Roth strategies often involves detailed analysis of income levels, plan design, and tax considerations—particularly for Aetna employees with higher earnings.

The Retirement Group can help you understand how these new regulations apply to your personal situation and assist in building a retirement strategy aligned with your long-term goals. To speak with a retirement planning professional, call (800) 900-5867.

Sources:

1. Kelley R. Taylor. “Roth 401(k) Changes: New Rules to Know for 2025 and 2026 Taxes.” Kiplinger , 2 Feb. 2026, www.kiplinger.com/taxes/roth-401k-changes-what-you-should-know .

2. United States, Department of the Treasury, Internal Revenue Service. “401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500.” IRS Newsroom , 13 Nov. 2025, www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500 .

3. Cross, Diane. “2026 Benefit Limits: HSA, HDHP, and ACA.” Sequoia , 15 May 2025, www.sequoia.com/2025/05/2026-benefit-limits-hsa-hdhp-and-aca/ .

How does Aetna Inc.'s frozen pension plan affect employees' eligibility for benefits, and what specific criteria must current employees meet to qualify for any benefits from the Retirement Plan for Employees of Aetna Inc.?

Eligibility for Benefits: Aetna Inc.'s pension plan has been frozen since January 1, 2011, meaning no new pension credits are accruing. Employees who were participants before this date remain eligible for benefits but cannot accrue additional pension credits. To qualify for benefits, participants need to have been vested, which generally occurs after three years of service(PensionSPD).

In what ways can employees at Aetna Inc. transition their pension benefits if they leave the company, and what implications does this have for their tax liabilities and retirement planning?

Transitioning Pension Benefits: If employees leave Aetna, they can opt for a lump-sum distribution or an annuity. Employees can roll over their lump-sum payments into an IRA or other tax-qualified plans to avoid immediate taxes. However, direct rollovers must follow the tax-qualified plan's rules. If not rolled over, employees are subject to immediate tax and potential penalties(PensionSPD).

What steps should an Aetna Inc. employee take if they become disabled and wish to continue receiving pension benefits, and how does the company's policy on disability impact their future retirement options?

Disability and Pension Benefits: Employees who become totally disabled and qualify for long-term disability can continue participating in the pension plan until their disability benefits cease or employment is terminated. No additional pension benefits accrue after December 31, 2010, but participation continues under the plan until employment formally ends(PensionSPD).

Can you explain the implications of the plan amendment rights that Aetna Inc. retains, particularly concerning any potential changes in the pension benefits and what this could mean for employee planning?

Plan Amendment Rights: Aetna reserves the right to amend or terminate the pension plan at any time. If the plan is terminated, participants will still receive benefits accrued up to the date of termination, protected by ERISA. Any future changes could impact employees' planning and retirement options(PensionSPD).

How does the IRS's annual contribution limits for pension plans in 2024 interact with the provisions of the Retirement Plan for Employees of Aetna Inc., and what considerations should employees keep in mind when planning their retirement contributions?

IRS Contribution Limits: The IRS sets annual contribution limits for pension plans, including defined benefit plans. In 2024, employees should ensure that their pension contributions and tax planning strategies align with these limits and the provisions of Aetna's pension plan(PensionSPD).

What are the options available to Aetna Inc. employees regarding pension benefit withdrawal, and how can they strategically choose between a lump-sum distribution versus an annuity option?

Withdrawal Options: Aetna employees can choose between a lump-sum distribution or various annuity options when withdrawing pension benefits. The lump-sum option allows for immediate access to funds, while annuities provide monthly payments over time, offering a more stable income stream(PensionSPD).

How does Aetna Inc. ensure compliance with ERISA regulations concerning the rights of employees in the retirement plan, and what resources are available for employees to understand their rights and claims procedures?

ERISA Compliance: Aetna complies with ERISA regulations, ensuring employees' rights are protected. Resources are available through the Plan Administrator and myHR, providing information on claims procedures, plan rights, and how to file appeals if necessary(PensionSPD).

What documentation should employees of Aetna Inc. be aware of when applying for their pension benefits, and how can they ensure that they maximize their benefits based on their years of service?

Documentation for Benefits: Employees should retain service records and review their benefit statements to ensure they receive the maximum pension benefits. They can request additional documents and assistance through myHR to verify their years of service and other relevant criteria(PensionSPD).

How do changes in interest rates throughout the years affect the annuity payments that employees at Aetna Inc. might receive upon retirement, and what strategies can they consider to optimize their retirement income?

Impact of Interest Rates on Annuities: Interest rates significantly affect annuity payments. Higher interest rates increase the monthly annuity amount. Employees should consider the timing of their retirement, especially at the end of the year, when interest rates for the following year are announced(PensionSPD).

If employees want to learn more about their pension options or have inquiries regarding the Retirement Plan for Employees of Aetna Inc., what are the best channels to contact the company, and what specific resources does Aetna provide for assistance?

Contact for Pension Inquiries: Employees can contact myHR at 1-888-MY-HR-CVS (1-888-694-7287), selecting the pension menu option for assistance. Aetna also provides detailed resources through the myHR website, helping employees understand their pension options and benefits(PensionSPD).

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

Aetna provides a defined contribution 401(k) plan with company matching contributions. Employees can contribute pre-tax or Roth (after-tax) dollars, and Aetna matches 100% of the first 6% of eligible compensation. The plan includes various investment options such as target-date funds, mutual funds, and a self-directed brokerage account. Aetna also offers an Employee Stock Purchase Plan (ESPP) with a discount on company stock. Financial planning resources and tools are available to help employees manage their retirement savings.

Layoffs and Restructuring: CVS Health, the parent company of Aetna, announced plans to cut 5,000 jobs nationwide, including 521 positions at Aetna, primarily in non-customer-facing roles. This move is part of a broader strategy to achieve $800 million in cost savings in 2024 (Sources: Connecticut Public, Beckers Payer). Impact on Connecticut: The layoffs will significantly impact the Hartford-based insurer, with a substantial number of affected employees working remotely but reporting to supervisors in Connecticut (Source: Connecticut Public). Operational Strategy: These changes align with CVS Health's focus on improving operational efficiency and financial performance (Sources: Connecticut Public, Beckers Payer).

Aetna, part of CVS Health, offers stock options and RSUs as part of its equity compensation packages. Stock options allow employees to purchase company stock at a set price post-vesting, while RSUs vest over several years. In 2022, Aetna enhanced its equity programs with performance-based RSUs. This continued in 2023 and 2024, with broader RSU programs and performance metrics for stock options. Executives and management receive significant portions of compensation in stock options and RSUs, promoting long-term commitment. [Source: Aetna Financial Reports 2022-2024, p. 92]

Aetna updated its employee healthcare benefits in 2022 with improved mental health support and preventive care services. The company introduced advanced digital tools and expanded telemedicine options. By 2023, Aetna continued to enhance its benefits package with additional wellness programs and comprehensive care solutions. For 2024, Aetna’s strategy focused on leveraging technology to provide innovative and comprehensive employee support. The updates aimed to address evolving health needs and improve overall well-being. Aetna’s approach reflected a commitment to maintaining robust healthcare benefits.

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For more information you can reach the plan administrator for Aetna at 151 farmington ave Hartford, CT 6156; or by calling them at 1-800-872-3862.

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