'As Roth catch-up rules reshape contribution strategies for higher earners in 2026, Nestle 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.
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'With mandatory Roth catch-up contributions beginning in 2026 for higher earners, Nestle 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.
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 Nestle 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 Nestle 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
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- Employee elective deferral limit: $24,500
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- Catch-up (age 50+): $7,500
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- 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 Nestle employees.
1. Consider a Health Savings Account (HSA)
If enrolled in an HSA-eligible health plan, an HSA offers several tax features:
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Contributions are not subject to federal income tax.
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Earnings grow tax-free.
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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
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2026: 3
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- $4,400 (individual)
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- $8,750 (family)
Individuals age 55 or older who are not enrolled in Medicare may contribute an additional $1,000 catch-up amount.
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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
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Single: $153,000 to $168,000
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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 Nestle 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 Nestle 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 primary purpose of Nestlé's 401(k) Savings Plan?
The primary purpose of Nestlé's 401(k) Savings Plan is to help employees save for retirement by allowing them to contribute a portion of their salary to a tax-advantaged account.
How can employees enroll in Nestlé's 401(k) Savings Plan?
Employees can enroll in Nestlé's 401(k) Savings Plan through the company’s online benefits portal or by contacting the HR department for assistance.
Does Nestlé match employee contributions to the 401(k) Savings Plan?
Yes, Nestlé offers a matching contribution to the 401(k) Savings Plan, which helps employees maximize their retirement savings.
What is the maximum contribution limit for Nestlé's 401(k) Savings Plan?
The maximum contribution limit for Nestlé's 401(k) Savings Plan is determined by the IRS and may change annually; employees should check the latest guidelines for the current limit.
Can employees of Nestlé choose how their 401(k) contributions are invested?
Yes, employees of Nestlé can choose from a variety of investment options within the 401(k) Savings Plan to align with their retirement goals and risk tolerance.
When can employees start withdrawing funds from Nestlé's 401(k) Savings Plan?
Employees can start withdrawing funds from Nestlé's 401(k) Savings Plan typically at age 59½, subject to specific plan rules and regulations.
What happens to an employee's 401(k) account if they leave Nestlé?
If an employee leaves Nestlé, they can choose to roll over their 401(k) account to another retirement plan, cash out the account, or leave it in the Nestlé plan if permitted.
Are there any penalties for early withdrawal from Nestlé's 401(k) Savings Plan?
Yes, there are generally penalties for early withdrawal from Nestlé's 401(k) Savings Plan, including income tax and a potential additional 10% penalty if withdrawn before age 59½.
How often can employees change their contribution amount to Nestlé's 401(k) Savings Plan?
Employees can typically change their contribution amount to Nestlé's 401(k) Savings Plan at any time, subject to the plan's specific rules.
Does Nestlé provide educational resources about the 401(k) Savings Plan?
Yes, Nestlé provides educational resources and workshops to help employees understand their 401(k) Savings Plan options and make informed decisions.
With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.
Nestlé provides both a defined benefit pension plan and a defined contribution plan. The defined benefit plan includes multiple sections depending on when employees joined and their career average revalued pensionable earnings. The defined contribution plan allows employees to accumulate savings with personal and employer contributions. Pension benefits are reviewed annually and adjusted based on inflation. The company also offers a 401(k) plan with employer matching contributions for its U.S. employees.
Restructuring and Layoffs: Nestle announced it will lay off approximately 4,000 employees globally as part of a restructuring plan to improve operational efficiency (Source: Bloomberg). Cost Management: The company aims to save $2 billion annually through these measures. Financial Performance: Nestle reported a 5% increase in net sales for Q3 2023, driven by strong demand for its food and beverage products (Source: Nestle).
Nestlé includes RSUs in its compensation packages, vesting over a specific period and converting into shares. Stock options are also granted, enabling employees to purchase shares at a fixed price.
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