Savers nationwide will get more chances to fatten their retirement savings accounts after the Internal Revenue Service announced today that 2026 contribution limits will be higher for some types of retirement plans.
The biggest increase is in the elective deferral limit for 401(k) and similar workplace plans, which rises to $24,500 from $19,500 in 2025. The changes, spurred by cost-of-living adjustments, are meant to assist Americans in more efficiently saving for retirement against continued inflationary headwinds.
The official guidelines reflecting these changes are generally released in late October or early November of the prior year, and estimates from financial experts mostly have come in line with these projections. The IRS has announced the 2026 retirement contribution limits, raising the 401(k) cap to $23,500. Learn how this impacts your retirement savings strategy.
Key Changes for 2026
Here’s a breakdown of the new limits for the 2026 tax year:
- 401(k), 403(b) and 457 Plans: The employee elective deferral limit for these plans will go up by $1,000 to $24,500. That goes for both pretax and Roth 401(k) contributions.
- IRA Contributions: The maximum amount that millennials can contribute to an IRA in 2020 will likely be the same as in 2019 – $7,000 for both Traditional and Roth IRAs.
- Catch-Up Contributions (50 or Over):
- The contribution limit for catch-up contributions to 401(k), 403(b), and most 457 plans for those age 50 and over will be $8,000, up from $7,500. In other words, those who qualify can contribute up to $32,500 ($24,500 + $8,000).
- For people 60, 61, 62 and 63, the “super catch-up” limit in an existing law raised by the SECURE 2.0 Act of 2022 is even higher, at $11,250 for 2026.
- The IRA catch-up contribution for people 50 and older will also remain the same at $1,000.
- Total Defined Contribution Limit: The most that can be contributed to a defined contribution plan (including employee and employer contributions, but not catch-up contributions) is expected to rise to $72,000 for 2026, up from $70,000 in 2025.
SECURE 2.0 Act’s Impact on Catch-Up Contributions (Effective 2026)
One major change for 2026, a result of the SECURE 2.0 Act, alters the way certain high earners contribute their catch-up amounts:
- Mandatory Roth for High Earners: For tax years beginning after 2025, individuals with prior year Social Security (FICA) wages that exceed $150,000 (as indexed for inflation from the $145,000 in 2024), the catch-up contribution shall be made as an after-tax Roth contribution. This means that contributions to the account aren’t tax-deductible in the year they are made, but qualified withdrawals in retirement are tax-free.
- Implication for Plans without Roth: When a 401(k) plan doesn’t allow Roth contributions, participants in this high earner group would not be eligible to make any catch-up contributions. This provision, which originally was scheduled to take effect in 2024, was postponed by the IRS to allow employers and payroll service providers additional time to update their systems.
Planning Ahead for Retirement Savers
These higher limits can be an excellent way for people to turbocharge their retirement planning. Financial advisors recommend reassessing existing contribution strategies to make the most of the higher thresholds, especially for those nearing retirement and able to take advantage of catch-up contributions.
Since the law’s effective date approaches, employers should also make sure that their retirement plans are updated to be compliant with SECURE 2.0 requirements, including the new mandatory Roth catch-up contributions for highly compensated employees.
The changes support a continued focus on increasing retirement savings security for America’s workers by promoting broad access and enhancing savings opportunities in an evolving economy.
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