The costliest 401(k) mistakes are missing the Dec. 31 payroll election deadline, leaving match money unclaimed, and ignoring RMD and beneficiary rules.
A 401(k) millionaire is a participant whose employer-plan balance passed $1 million, usually after decades of full contributions plus match. Fidelity counted a record 595,000 401(k) millionaires in Q2 2025, averaging 26 years in-plan and about 17% contribution rates. That record shows sustained maximum elections plus match capture drive outcomes more than timing the market.
Table of Contents
- Lock Your Contribution Election Before Dec. 31
- Are You Capturing the Full Match?
- Does the 2026 Roth Catch-Up Rule Change Your Election?
- Will Your First RMD Trigger Two Taxable Withdrawals?
- Is Your Beneficiary Form Still Correct?
Lock Your Contribution Election Before Dec. 31
The IRS set the 2026 employee elective-deferral limit at $24,500, plus $8,000 catch-up at age 50 and older and $11,250 for ages 60-63, with $72,000 in total annual additions, according to the IRS COLA table. Calendar-year employee deferrals must be elected and contributed through payroll during that calendar year, effectively a Dec.
31 deadline. Employer contributions can wait until the business tax-return due date with extensions, according to IRS rules summarized by Intuit. That split confuses workers who assume they can fix employee deferrals in April.
- Check current deferral rate and payroll cutoff with HR
- Raise elections in time for remaining paychecks to count
- Confirm catch-up eligibility by age and payroll timing
Are You Capturing the Full Match?
About 18.8% of eligible employees did not contribute enough to capture the full employer match in Q2 2026, according to Fidelity's Q2 2026 match analysis. Each missed pay period forfeits a guaranteed return that cannot be recovered later.
Match formulas apply per paycheck, not as a year-end true-up in many plans. A worker contributing 4% when 6% earns the full match loses money every payday.
Does the 2026 Roth Catch-Up Rule Change Your Election?
Starting Jan. 1, 2026, SECURE 2.0 requires workers age 50 and older with prior-year FICA wages over $150,000 to make catch-up contributions as Roth after-tax, not pre-tax, if the plan offers Roth, according to IRS Notice 2023-62 guidance summarized by Moore Colson.
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Pre-tax catch-up elections by this group will fail unless the plan routes them to Roth. Check whether your plan offers Roth and whether payroll applies the wage test. High earners near the threshold should confirm prior-year wages and update election forms before the first 2026 catch-up contribution.
Will Your First RMD Trigger Two Taxable Withdrawals?
A required minimum distribution, or RMD, is the annual taxable withdrawal the tax code requires from pre-tax retirement balances after a set age. The first RMD is due by April 1 of the year after reaching age 73, with later RMDs due each Dec. 31, according to IRS RMD guidance.
Delaying the first forces two taxable RMDs in one year. Missing an RMD triggers a 25% IRS excise tax on the shortfall, reduced to 10% if corrected within two years through withdrawal plus Form 5329, according to a SECURE 2.0 summary citing IRS rules. Calendar the age-73 deadline now rather than relying on the April extension.
Is Your Beneficiary Form Still Correct?
A married participant's 401(k) defaults to the spouse as beneficiary. Naming another primary beneficiary requires the spouse's written, notarized or plan-witnessed consent, and a will does not override the plan form.
Divorce, remarriage, or a new child does not update the designation automatically. Pull the current plan form today and replace any outdated will-based instruction with a signed plan beneficiary election.
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