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

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

Healthcare Provider Update: Healthcare Provider: Kaiser Permanente Kaiser Permanente is a leading integrated healthcare provider that offers a range of medical services including preventive care, hospitalization, and specialty care across various states. Potential Healthcare Cost Increases in 2026 As we approach 2026, significant healthcare cost increases are expected, especially for Kaiser Permanente customers. Health insurance premiums for Affordable Care Act (ACA) plans are projected to rise dramatically, with some individuals facing increases of over 75% due to the anticipated expiration of enhanced federal premium subsidies. Coupled with higher medical costs and aggressive rate hikes from major insurers, many policyholders could experience unprecedented out-of-pocket expenses, signaling a challenging financial landscape for consumers in the near future. Click here to learn more

It is important for KP employees to pay specific attention to interest rates as some of the KP pension plans are sensitive to rate changes. Some KP employees are allowed to take their pension utilising new rates each month. If interest rates continue to rise, KP employees will find this article useful as it will help with the retirement planning process.

'With mandatory Roth catch-up contributions beginning in 2026 for higher earners, Kaiser Permanente 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, Kaiser Permanente 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 Kaiser Permanente 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 Kaiser Permanente 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 Kaiser Permanente 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 Kaiser Permanente 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 Kaiser Permanente 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/ .

What is the 401(k) plan offered by Kaiser Permanente?

The 401(k) plan offered by Kaiser Permanente is a retirement savings plan that allows employees to save a portion of their salary on a pre-tax basis, helping them build a nest egg for retirement.

How does Kaiser Permanente match contributions to the 401(k) plan?

Kaiser Permanente provides a matching contribution to the 401(k) plan, where they match a percentage of employee contributions, up to a certain limit, helping employees maximize their savings.

What are the eligibility requirements for Kaiser Permanente's 401(k) plan?

Employees of Kaiser Permanente are generally eligible to participate in the 401(k) plan after completing a specified period of service, which is outlined in the plan documents.

Can employees of Kaiser Permanente make changes to their 401(k) contributions?

Yes, employees of Kaiser Permanente can change their contribution amounts to the 401(k) plan at any time, subject to the plan's guidelines.

What investment options are available in Kaiser Permanente's 401(k) plan?

Kaiser Permanente's 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles to help employees diversify their portfolios.

Does Kaiser Permanente provide educational resources for employees regarding the 401(k) plan?

Yes, Kaiser Permanente offers educational resources and tools to help employees understand their 401(k) options and make informed investment decisions.

What is the vesting schedule for Kaiser Permanentes 401(k) matching contributions?

The vesting schedule for Kaiser Permanentes 401(k) matching contributions varies based on years of service, and employees can find specific details in the plan documents.

Can Kaiser Permanente employees take loans against their 401(k) savings?

Yes, Kaiser Permanente allows employees to take loans against their 401(k) savings, subject to the terms and conditions outlined in the plan.

What happens to the 401(k) plan when an employee leaves Kaiser Permanente?

When an employee leaves Kaiser Permanente, they have several options regarding their 401(k) plan, including cashing out, rolling it over to another retirement account, or leaving it in the plan if allowed.

Is there an automatic enrollment feature in Kaiser Permanente's 401(k) plan?

Yes, Kaiser Permanente may have an automatic enrollment feature that enrolls eligible employees into the 401(k) plan at a default contribution rate unless they choose to opt-out.

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

Kaiser Permanente offers a defined benefit pension plan providing retirement income based on compensation and years of service. The plan does not include a cash balance component. Employees can also contribute to additional retirement accounts with potential employer matching.

Kaiser Permanente announced significant layoffs, cutting over 100 IT roles in 2023, primarily impacting Northern California. This decision followed an earlier reduction of 49 workers in human resources services. These layoffs coincided with a major strike by over 75,000 employees protesting short-staffing and corporate outsourcing, highlighting ongoing labor tensions within the healthcare industry. In response to labor disputes, Kaiser Permanente ratified a new four-year contract in November 2023 with more than 85,000 healthcare workers. The agreement includes annual wage increases, a minimum wage boost, and more investments in employee training and hiring. This move aims to address worker burnout and staffing shortages, reflecting the pressures on the healthcare sector amidst economic challenges and rising operational costs.

Kaiser Permanente offers RSUs to its employees, vesting over a period and converting into shares upon vesting. Stock options are not typically part of their compensation package, focusing more on RSUs and other performance incentives.

Kaiser Permanente, a leader in integrated healthcare, has made several significant updates to its employee healthcare benefits in recent years, adapting to the changing economic, investment, tax, and political landscapes. In 2023 and 2024, Kaiser Permanente has emphasized connected care, combining care and coverage to simplify access to health services. Noteworthy updates include $0 copays for telehealth services, $15 chiropractic services (up to 20 visits per year), and enhanced rewards programs where employees can earn up to $150 in Healthy Rewards. The health plan also continues to support employees' mental and emotional well-being through free access to the Calm and myStrength apps, providing meditation and personalized mental health resources at no cost (Kaiser Permanente) (Kaiser Permanente). Given the current economic uncertainties and evolving healthcare regulations, Kaiser Permanente's approach to healthcare benefits underscores the importance of comprehensive, accessible, and affordable healthcare for its employees. This strategy not only addresses immediate health needs but also enhances overall employee satisfaction and retention. Discussing healthcare benefits is crucial in today's climate as companies like Kaiser Permanente strive to balance cost management with the delivery of high-quality healthcare services. The company's proactive measures ensure that their employees are well-supported, promoting a healthier and more productive workforce (Kaiser Permanente) (Working at Kaiser Permanente).

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For more information you can reach the plan administrator for Kaiser Permanente at one kaiser plaza Oakland, CA 94612; or by calling them at 510-271-5940.

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