Retirement Contribution Rules Under OBBBA

The One Big Beautiful Bill Act (OBBBA) reshapes retirement planning for small business owners, but not in the way most people expect. The biggest shifts are not immediate write-offs. They are structural changes that increase contribution limits, expand Roth options, and elevate retirement planning as a core tax strategy beginning in 2026.

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For 1099 earners and small business owners, retirement contributions are no longer just about saving for the future. They are a primary lever for managing taxable income, preserving flexibility, and coordinating deductions under OBBBA.

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This page outlines what changes beginning in 2026, what remains unchanged for 2025, and how to plan retirement contributions proactively under the new rules.

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What Changes Beginning in 2026

Starting in 2026, OBBBA increases contribution limits for 401(k) type plans by approximately 10%. These limits will continue to index over time.

 

This directly affects:

• Solo 401(k) plans.

• Company sponsored 401(k) plans.

• Owner employee contribution strategies

 

Higher limits create more room to defer income and fine tune tax exposure, especially for profitable small businesses and independent contractors.

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The Roth Shift Accelerates

OBBBA reinforces and expands a broader shift toward Roth based retirement planning.

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New and expanded Roth provisions include:

• Roth SEP plans are now permitted.

• Roth SIMPLE plans are now permitted.

• Employer contributions may be designated as Roth.

• High-income catch-up contributions must be Roth beginning in 2026.

 

These changes move more retirement dollars into after tax treatment, increasing flexibility in future withdrawal planning and reducing reliance on a single tax outcome in retirement.

 

For many owners, the question is no longer whether to use Roth options, but how much of the overall strategy should be Roth versus pre-tax.

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What Remains Unchanged for 2025

Retirement contribution rules for tax year 2025 remain unchanged.

 

Business owners may still use existing strategies, including:

• SEP plans.

• SIMPLE plans.

• Solo 401(k) plans under current contribution limits.

 

Solo 401(k) plans remain especially powerful, allowing total contributions of up to $70,000, or more for those age 50 (fifty) and older.

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2025 remains a familiar planning year and an important opportunity to prepare before the 2026 changes take effect.

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Why Retirement Planning Matters More Under OBBBA

OBBBA made the 20% Qualified Business Income (QBI) deduction permanent and expanded phase in rules beginning in 2026. Retirement contributions now interact more directly with broader tax strategy.

 

For small business owners, retirement planning now:

• Reduces taxable income in the current year.

• Supports eligibility for income-based deductions.

• Preserves flexibility across future tax years.

• Coordinates with charitable and income planning.

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Retirement contributions are no longer a side decision. Under OBBBA, they are foundational.

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Recommended Retirement Planning Actions

To stay ahead of the changes, business owners should consider the following steps:

• Maximize current year contributions under existing 2025 rules.

• Evaluate whether a Solo 401(k) or other plan structure remains optimal.

• Review Roth versus pre-tax contribution mix.

• Plan for mandatory Roth treatment of certain catch-up contributions in 2026.

• Coordinate retirement contributions with QBI, charitable, and income planning.

 

Waiting until filing season limits options. Early planning creates leverage.

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Request a Retirement Contribution Planning Review

A retirement contribution planning review evaluates how OBBBA affects your current strategy and identifies opportunities to improve tax outcomes under the new rules.

 

A review includes:

• Plan type and eligibility analysis.

• Contribution limit optimization.

• Roth versus pre-tax strategy evaluation.

• Coordination with QBI and income planning.

 

Preparation guidance for 2026 changes.

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Frequently Asked Questions About Retirement Contributions Under OBBBA

Did OBBBA change retirement contribution rules for 2025?
No. Contribution rules for 2025 remain unchanged. The major changes begin in 2026.

 

Which plans are affected by the higher contribution limits?
Solo 401(k) plans and company sponsored 401(k) plans see increased limits beginning in 2026.

 

Are Roth SEP and Roth SIMPLE plans now allowed?
Yes. OBBBA permits Roth versions of SEP and SIMPLE plans, expanding after tax retirement options.

 

Do I have to use Roth contributions?
Certain high-income catch-up contributions must be Roth beginning in 2026. Other Roth usage depends on individual strategy.

 

Why should small business owners plan now?
Because contribution strategy affects taxable income, deductions, and flexibility. Planning early preserves options.

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Retirement Contributions Under OBBBA

OBBBA introduces higher contribution limits and expanded Roth options that significantly affect retirement planning for small business owners beginning in 2026. A retirement contribution review helps determine how plan type, income level, and contribution strategy impact overall tax outcomes.

 

This review is designed for 1099 earners, business owners, and high-income professionals who want retirement planning to work as part of a broader tax strategy.

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Request a Retirement Contribution Planning Review

Provide information about your business structure, income range, and current retirement plan. This review identifies contribution opportunities, Roth planning considerations, and tax strategy alignment under OBBBA. Early planning improves outcomes and preserves flexibility.