NEWSLETTER
Xerxes Nabong, CFP®, CDFA®
Philip M. Maliniak, CRPC®
Nicole Brown-Griffin, CFP®, CDFA®, EA
Aaron Petty, Client Associate
Hampton Roads: (757) 394-3486
Greater Phoenix: (480) 687-9339
Orange County: (949) 660-8869
Wealth Avenue December 2025 Newsletter — Key 2026 Retirement, Tax, and Social Security Updates + Your Action Steps
Yes, the subject line says December, but with so many changes ahead, we are sending this newsletter early so you have time to review what’s changing, make adjustments, and update your 401(k) or workplace plan before January payroll cycles begin. Below is a complete overview of all major IRS, Social Security, Medicare, and retirement-related updates that may affect your 2026 planning, followed by clear action steps to help you stay on track.
2026 Retirement Contribution Changes
401(k), 403(b), TSP, 457 & Solo 401(k) Annual Contribution Limits
- 2026 employee contribution limit: $24,500 (up from $23,500)
- Age 50+ catch-up: $8,000 (up from $7,500)
- Ages 60–63 super catch-up: $11,250 (this remains the same)
Maximum Possible Employee Annual Contributions:
- Age 49 and under: $24,500/year
- Age 50+: $32,500
- Ages 60–63: $35,750
These limits apply to all 401(k)-type plans combined, including any traditional employer plan, government plans (TSP, 457), and Solo 401(k)s if you are self-employed.
Action Steps:
- Divide $24,500 into your pay periods (or annual selfemployment income, for Solo 401(k) participants) to determine the correct deferral %.
- If you are 50 or older, check whether your employer (or Solo 401(k) provider) requires a separate contribution % or election for catch-up or super catch-up contributions.
- Update your deferral % for January payroll—changes often take 1–2 pay cycles to apply.
IRA & Roth IRA Contribution Limits
- Traditional & Roth IRA limit: $7,500 (up from $7,000)
- IRA catch-up (age 50+): $1,100 (up from $1,000)
- Total if age 50+: $8,600 (up from $7,500)
Action Steps:
- Increase your monthly IRA or Roth IRA contributions:
- $7,500 ÷ 12 = $625/month (age 49 and under)
- $8,600 ÷ 12 = $716/month (age 50+)
Confirm IRA eligibility using the income phase-outs below.
IRA Deduction Phase-Outs
You can make a tax-deductible Traditional IRA contribution even if you are covered under a workplace retirement plan (such as a 401(k), 403(b), TSP, 457, or Solo 401(k)). However, your ability to take the tax deduction is subject to the income phase-out limits below. If your income falls within these ranges, the deduction is partially reduced. If your income is above these ranges, the IRA contribution is allowed but not tax-deductible.
- Single (covered by workplace plan): $81,000–$91,000
- Married filing jointly, contributor covered: $129,000– $149,000
- Married filing jointly, contributor not covered but spouse is: $242,000–$252,000
- Married filing separately: $0–$10,000
Roth IRA Income Phase-Outs
- Single / Head of Household: $153,000–$168,000
- Married filing jointly: $242,000–$252,000
- Married filing separately: $0–$10,000
Action Steps: If your income is near these limits, ask us to verify Roth IRA eligibility, whether a Backdoor Roth is appropriate for 2026, or if you are concerned that you’re near or expect to be over the limits, consider increasing your pre-tax 401(k)/403(b)/TSP/457/Solo 401(k) contributions to get below the above thresholds or evaluate whether Roth conversions make sense for your tax plan.
Simple IRA
- Employee contribution: $17,000
- SIMPLE catch-up (age 50+): $4,000
- Higher SIMPLE catch-up for ages 60–63: $5,250
Action Steps: If you are a SIMPLE IRA participant, divide $17,000 (or $21,000 if 50+) across your pay periods to set the correct 2026 deferral %.
Health Savings Accounts (HSA)
- Individual: $4,400 (up from $4,300)
- Family: $8,750 (up from $8,550)
- Catch-up (age 55+): $1,000
Action Steps:
- Increase January contributions to match your intended 2026 annual HSA funding.
- If you will enroll in Medicare in 2026, remember HSA contributions must stop the month Medicare begins.
Flexible Spending Accounts (FSA)
- Health FSA: $3,400 (up from $3,300)
- Health FSA Carryover: $680 (maximum, if plan permits, up from $660)
- Dependent Care FSA: $7,500 per houshold (up from$5,000 per household)
Action Steps: Review open enrollment elections to ensure you’re maximizing pre-tax medical and dependent care savings.
Medicare IRMAA Planning
Medicare IRMAA is an additional surcharge added to Medicare Medicare IRMAA is an additional surcharge added to Medicare Part B and Part D premiums for retirees whose Modified Adjusted Gross Income (MAGI) exceeds certain thresholds. Your 2026 Medicare premiums are based on your 2024 tax return. Below are the 2026 IRMAA income brackets and the actual 2026 monthly premiums.
2026 Part B Premiums (Including IRMAA) - Single Filers MAGI / Married Filing Jointly MAGI:
- ≤ $109,000 / ≤ $218,000: $202.90/month (standard premium, up from $185/month)
- $109,001–$137,000 / $218,001–$274,000: $284.10/month
- $137,001–$171,000 / $274,001–$342,000: $405.80/month
- $171,001–$205,000 / $342,001–$410,000: $527.50/month
- $205,001–$500,000 / $410,001–$750,000: $649.20/month
- $500,000+ / $750,000+: $689.90/month
2026 Part D IRMAA Surcharges (Added on top of your plan’s regular Part D premium)
- ≤ $109,000 / ≤ $218,000: no extra charge
- $109,001–$137,000 / $218,001–$274,000: +$14.50/month
- $137,001–$171,000 / $274,001–$342,000: +$37.00/month
- $171,001–$205,000 / $342,001–$410,000: +$59.40/month
- $205,001–$500,000 / $410,001–$750,000: +$81.80/month
- $500,000+ / $750,000+: +$91.00/month
What commonly pushes clients into IRMAA
Roth conversions, RSU income or other stock-based compensation, bonus or commission spikes, capital gains from property or brokerage sales, large IRA withdrawals or RMDs, and one-time business or rental property sales can all push your income higher —and even being just one dollar over an IRMAA threshold triggers the higher Medicare premium for the entire year.
Ways to control or reduce IRMAA exposure
Ways to control or reduce IRMAA exposure include pulling income from Roth IRAs, bank accounts, or brokerage principal (which does not increase MAGI), using Qualified Charitable Distributions at age 70½ or older to reduce taxable RMD income, spreading large income events across multiple years, and timing Roth conversions strategically, sometimes completing them in 2025 is more beneficial than waiting until 2026 when tax brackets increase.
Action Step: If you are approaching an IRMAA bracket, ask us to review your projected 2025–2026 income. We can help determine whether shifting income, using QCDs, or adjusting distributions can keep you below the next threshold and avoid unnecessary premium increases.
Required Minimum Distributions (RMDs)
RMD age: 73 (birth years 1951–1959)
Action Step: If 2026 is your first RMD year, we can calculate your required withdrawal early and coordinate Qualified Charitable Distributions (QCDs) if appropriate. QCDs are not taxable, and they count toward satisfying your RMD without increasing your income. If you are turning age 70½ next year and you are charitably inclined, consider holding off on your regular charitable giving until you reach 70½ so those gifts can be made directly from your IRA. This makes the contribution tax-free to you, reduces your taxable income, and can help manage both Medicare IRMAA exposure and overall tax liability.
2026 Social Security Updates
Cost-of-Living Adjustment (COLA): COLA: 2.8%
Maximum Taxable Earnings: Social Security wage base: $184,500 (up from $176,100); Medicare wage base: No limit
Retirement Earnings Test:
The Retirement Earnings Test applies only if you collect Social Security before your Full Retirement Age (FRA) and you are still working. Social Security places a limit on how much you can earn from wages or self-employment before they temporarily withhold part of your benefit.
It does not apply after you reach FRA. Once you hit FRA, you can work and earn as much as you want with no reduction to your Social Security income. Any benefits withheld before FRA due to earnings are not permanently lost; Social Security increases your monthly benefit at FRA to account for the months withheld.
There are two different earnings limits:
- A lower limit for the years prior to the year you reach FRA.
- A higher limit for the calendar year in which you reach FRA, applying only to the months before your FRA birthday month.
This means the timing of your wages matters. If you are born later in the year—mid-year or beyond—more of your annual income may fall into the period before your FRA month, which may increase the chances of exceeding the earnings limit.
Retirement Earnings Test Limits
- Under FRA: $24,480/year ($1 withheld for every $2 earned above the limit)
- Year reaching Full Retirement Age (FRA): $65,160/year ($1 withheld for every $3 earned above the limit)
- After FRA: No limit — once you reach FRA, you can work and earn any amount with no reduction to benefits.
Action Step: If you plan to collect Social Security before FRA, verify your 2026 projected earnings so benefits are not reduced. If you will reach FRA next year, are still working, and want to start collecting benefits, review your expected 2026 income carefully. Because only earnings before your FRA month count toward the limit, those with birthdays later in the year may have more income subject to the earnings test. In some cases, it may be advisable to wait until 2027 to begin your benefit to avoid a temporary reduction.
Employer Match Reminder
Many employers match retirement plan contributions, but the match is usually calculated per pay period, not annually. This means that if you front-load your contributions early in the year and hit the annual max too soon, your contributions stop later in the year, and your employer may stop matching as well, even though you still had match-eligible income in those remaining pay periods.
Action Step: Ask HR whether your plan offers a true-up contribution. A true-up means the employer will review your total annual contributions and give you any missed match at year-end. If your plan does not offer a true-up, avoid front-loading your contributions so you don’t miss out on employer match dollars you would have otherwise received.
Gifting into 529 Plan Updates
For tax year 2026, the annual exclusion for gifts remains at $19,000.
Action Step: If funding a 529, divide your planned annual gift by 12 or schedule an early-year lump sum.
Your 2026 Action Checklist
- Update employer plan, Simple IRA, or Solo 401(k) contribution % to reflect new higher contribution limits
- Verify catch-up and super catch-up rules (50+ and 60–63)
- Increase IRA/Roth IRA contributions ($625/month or $716/month if 50+)
- Review Roth IRA eligibility or Backdoor Roth strategy
- Review Social Security earnings limits if claiming before FRA
- Adjust HSA, FSA, and Dependent Care contributions
- Review IRMAA thresholds
- Confirm employer match true-up rules
- Coordinate all strategies with your tax plan
If you’d like updated 2026 projections, withholding recommendations, or help adjusting your savings strategy, simply reply to this email and we’ll schedule some time to strategize ahead.
Your Team at Wealth Avenue,
P.S. As you know, we are always grateful for the introductions you’ve made to us. 2025 has been a great year, and we truly appreciate every referral you’ve sent our way. Thanks to you, our practice continues to grow, and we’re honored by the trust you place in us.
As we look ahead to 2026, many people will begin the year with fresh financial goals. If you know someone who is approaching retirement, navigating new tax laws, or simply looking to get more organized with their finances, we would be grateful for the opportunity to support them. We are always happy to welcome new referrals.
And as we plan for all the updates and strategies outlined in this newsletter, please know that we are also happy to collaborate directly with your CPA and your estate planning attorney. Working together ensures everyone is aligned, and your financial, tax, and estate strategies stay fully coordinated.
And lastly, here’s a recent Wall Street Journal article worth reading. It explains how the 2026 federal tax brackets and standard deduction are rising, meaning it will take more income to move into higher brackets, and many taxpayers earning the same amount next year may owe slightly less in federal income tax. It also highlights new thresholds for the 0% capital-gains bracket and an increased estate-tax exclusion of $15 million per person, which could create meaningful planning opportunities for gifting, investment sales, and long-term estate strategy.
