The IRS has announced the 2026 contribution and benefit limits for 401(k), IRA, 403(b) and governmental 457(b) plans.
- Under the recently announced limits, individuals can contribute $24,500 for 2026 an increase from $23,500 for 2025 to their Internal Revenue Code (“IRC”) 401(k), 403(b) and 457(b) plans.
- The catch-up contribution limit for employees age 50 and older for their 401(k), 403(b) and 457(b) plans is increased to $8,000 for 2026 up from $7,500 in 2025. As a result, 50 and over employees, can make contributions to 401(k), 403(b) and 457 plans up to $32,500 each year for 2026.
- Notably, there is a higher catch-up contribution limit of $11,250 for participation by employees ages 60-63 instead of the $8,000 catch-up limit for those 50 and over.
Mandatory Roth Catch-up Contributions for Certain Employees and Action Items
Beginning in 2026, 401(k), 403(b) and governmental 457(b) plan participants who earned more than $150,000 in FICA wages in 2025 (“high paid participants”), the SECURE Act provides any catch-up contributions for ages 50 and over (including “super” catchups for participants ages 60-63) be designated Roth after tax contributions. Under the law and related regulations, employers will need to apply this change even if the participant elected to have all catch-up contributions treated as pre-tax contributions, and even without the participant’s agreement. However, the employer must allow a highly paid participant to make a new catch-up election if the new mandatory Roth catch-up contribution is applicable. The employer must determine the participant’s FICA wage information to confirm which employees are subject to the Roth catch-up requirement for the following year.
Plan sponsors should coordinate this requirement with their participants, plan recordkeepers and payroll providers before January 2026. Plan sponsors should review their plan to determine if Roth contributions are allowed and if the plan provides catch-up contributions. It is strongly recommended that sponsors communicate the change in the law to the highly paid participants impacted by this new Roth catch-up requirement and address any election updates needed.
SIMPLE Plans
For employees who participate in a SIMPLE plan and are age 50 and over, the catch-up contribution limit is increased to $4,000 in 2026 which is increased from $3,500 in 2025.
IRAs
IRA contribution limits are increased to $7,500 for 2026, up from $7,000 in 2025. The catch-up contribution to IRA participants age 50 and over is increased to $1,100 for 2026 from $1,000 in 2025.
Traditional IRA Deduction Phase-Out Ranges
Determining the amount of contribution deduction to a traditional IRA depends on if the taxpayer and/or spouse is participating in an employer’s retirement plan, their status and income and is phased out in 2026 as follows:
i) if the taxpayer is single and participating in an employer’s retirement plan then the range of the phase-out range is between $81,000 and $91,000, which is increased from 2025 range of between $79,000 and $89,000;
ii) if the taxpayer is married filing jointly and the spouse is making the IRA contribution and is also participating in an employer’s retirement plan, then the phase out is $129,000 and $149,000, which is increased from 2025 amount of between $126,000 and $146,000;
iii) if the taxpayer is married and filing a separate tax return and is covered by an employer retirement plan, then there is no increase as the phased-out amount stays between $0 and $10,000; and
iv) if the taxpayer is not covered by an employer’s retirement plan and is making an IRA contribution but is married to someone who is covered by an employer’s retirement plan, then the phased to amount in 2026 is between $242,000 and $252,000, which is increased from 2025 amount of between $236,000 and $246,000.
Additional Retirement Plan Limitations for 2026
Effective January 1, 2026, the annual benefit limitation for a defined benefit plan under IRC Section 415(b) increased to $290,000 for 2026 increased from $280,000 in 2025. The defined contribution annual benefit limit is $72,000, which is an increase from $70,000 for 2025.
The annual compensation limit under IRC Section 417(a) is $360,000 for 2026, which is increased from $350,000 for 2025.
Under IRC Section 416, the definition of a key employee in top heavy plan will be increased from $235,000 for 2026, which is increased from $230,000 for 2025.
Under IRC Section 414, the definition of highly compensated employee compensation will stay at $160,000 in 2026.
Plan Amendments and Required Notices
As plan sponsors prepare for 2026 change in the limit contribution limits should also address the plan amendments that may be needed by year-end.
For calendar year defined contribution plans, sponsors must provide plan participants with Notice of the 2026 annual plan limits within a reasonable amount of time, usually 30 days before the year-end, i.e., may be needed by December 1, 2025.
For questions or additional information on plan contribution limits, please contact Frier Levitt ERISA attorneys.
