New 2026 Contribution Limits for 401(k)s & IRAs — What You Need to Know
Overview
The Internal Revenue Service (IRS) has announced key updates for retirement savings contribution limits for 2026. These adjustments affect workplace plans such as the 401(k) plan (and similar 403(b), 457(b) plans) and individual retirement accounts (IRAs). The changes include higher base limits, increased “catch-up” amounts for older savers, and new rules for high-income earners.
Here’s what you need to know — and how to use the increase to benefit your retirement strategy.
What’s Changing for 2026
1. Base Elective Deferral Limits
- For most employees under age 50 in a 401(k), 403(b) or eligible 457(b): the contribution limit rises from $23,500 (2025) to $24,500 for 2026.
- For IRAs (traditional + Roth combined): the limit goes from $7,000 (2025) to $7,500 for 2026.
2. Catch-Up Contributions (age 50+ and special age band)
- Participants age 50+ in workplace plans: The standard catch-up contribution rises to $8,000 in 2026 (up from $7,500 in 2025).
- For those aged 60-63: Known as the “super catch-up”, this group may contribute up to ≈ $12,000 (150% of the standard catch-up) in 2026 under certain plans.
3. High-Income Earners & Roth-Only Catch-Up Rule
Beginning in 2026, if you earn above a certain threshold (for example wages with one employer exceeding ~$150,000) and you participate in a workplace plan, then any catch-up contributions must be made as after-tax Roth contributions rather than pretax.
4. Total Contribution Limits (Employer + Employee)
The overall combined limit for defined contribution plans (employee + employer + any after-tax) also rises. For example, from ~$70,000 in 2025 to ~$72,000 in 2026 for those under 50.
Why It Matters
- More savings opportunity: The higher limits enable you to increase the amount you put into tax-advantaged retirement accounts, which can help boost your long-term wealth accumulation.
- Older savers benefit: If you’re age 50 or older — and especially 60-63 — you now have greater opportunity to catch up.
- Tax strategy change for high earners: If you’re earning above the threshold, the requirement to use Roth catch-up contributions means you’ll pay tax now, not later. This changes the calculus of pretax vs Roth savings.
- Plan design considerations: Because some features (like the super catch-up or Roth-only catch-up) depend on plan adoption by your employer, it’s important to check with your plan administrator.
Action Steps for Savers
- Review your 2026 savings plan: If you weren’t maxing contributions before, consider increasing your deferrals to reflect the new limits.
- If age 50+: Make sure you’re taking full advantage of the catch-up limits. Especially if you’re age 60-63, confirm whether your plan offers the super catch-up option.
- If you’re a high earner: Check whether your prior‐year wages trigger the Roth-only catch-up rule. If so, you may want to evaluate the impact of paying tax now vs later.
- Check with your employer/plan: Ensure the plan supports the new limits and features (super catch-up, Roth option) and that your payroll elections align appropriately.
- Coordinate with IRAs: Even with higher 401(k) limits, don’t neglect your IRA contributions — especially if you qualify for a Roth IRA or traditional IRA and the tax advantages thereof.
- Think long-term: Use this as an opportunity to revisit your overall retirement savings strategy — asset allocation, emergency fund, non-retirement investment, etc.
Final Thoughts
The increase in contribution limits for 2026 presents a meaningful opportunity for many savers to accelerate retirement build-up. Especially if you’re age 50+ or earning at higher levels, understanding the rules and acting proactively can put you in a stronger position.
As always, retirement plan rules can be complex—if you’re uncertain how these changes apply to your situation, it may be worth consulting a financial planner or tax advisor.
