The IRS has officially increased the 401(k) and IRA contribution limits for 2026, providing savers with a larger window for tax-advantaged growth. The standard annual 401(k) deferral limit rises by $1,000 to $24,500. Savers can contribute a maximum of $7,500 to an IRA, representing a $500 increase from the previous limit. The agency also boosted the special catch-up contributions for workers aged 50 and over. Inflation adjustments motivate these higher limits, directly helping Americans accelerate their retirement planning.
New 401(k) and Employer Plan Limits for 2026
The Internal Revenue Service (IRS) implements cost-of-living adjustments annually to maintain savings power. Workers should adjust their contribution percentages to capture these increases starting in January 2026.
Standard Elective Deferral Cap Rises
The elective deferral limit increases from $23,500 to $24,500 for the 2026 tax year. This $1,000 increase applies universally to 401(k), 403(b), governmental 457 plans, and the Thrift Savings Plan (TSP). Employees should contact their payroll provider immediately to update their salary deferral election. The overall defined contribution limit, which combines employee and employer contributions, also increases to $72,000 (up from $70,000).
Maximizing Catch-Up Contributions (Age 50+)
Employees aged 50 and older receive a higher standard catch-up opportunity next year. The general catch-up contribution limit for these plans increases by $500 to $8,000. Eligible participants can now contribute a combined total of $32,500 (the standard $24,500 plus the $8,000 catch-up) to their workplace plan.
The SECURE 2.0 Super Catch-Up Window (Ages 60-63)
A higher catch-up limit applies specifically to employees turning age 60, 61, 62, or 63 during 2026. This SECURE 2.0 Act provision allows a “super” catch-up contribution of $11,250, provided the plan permits it. These eligible savers can contribute a combined plan maximum of $35,750 in 2026, significantly boosting late-career savings.
Key Increases for IRA Contribution Limits
Traditional and Roth Individual Retirement Arrangements (IRAs) also see upward adjustments for the 2026 tax year. These limits apply across all IRA accounts held by an individual.
Standard IRA Maximum Jumps
The annual contribution limit for both Traditional and Roth IRAs increases from $7,000 to $7,500. This $500 boost gives individual investors more space for personal, tax-advantaged savings outside a workplace plan.
IRA Catch-Up for Savers 50 and Older
The IRA catch-up contribution for individuals aged 50 and older increases by $100 to $ 1,000. Older savers can therefore contribute a total of $8,600 to their IRA in 2026. This change reflects mandatory indexing for inflation under SECURE 2.0 rules.
Updated Roth IRA Income Phase-Out Ranges
The Modified Adjusted Gross Income (MAGI) phase-out ranges for Roth IRA contributions expand next year. Single taxpayers see their phase-out range increase to $153,000 – $168,000. Married couples filing jointly now face a higher phase-out range of $242,000 – $252,000. These wider ranges allow more moderate- to high-income earners to contribute directly to a Roth IRA.
Why the IRS Adjusts Contribution Limits
Cost-of-Living Adjustments (COLA) Drive Increases
The IRS uses a specific formula to adjust these dollar limits annually, directly tied to economic inflation data. These Cost-of-Living Adjustments prevent inflation from eroding the real value of retirement savings thresholds. High inflation rates in recent years automatically trigger these noticeable increases.
Actionable Steps for Tax Planning
Higher contribution limits necessitate an immediate review of personal financial strategy. Maximize your contributions before year-end, then plan to increase payroll deductions for 2026 to hit the new caps. Taxpayers subject to the income limits should confirm their eligibility for IRA deductions and Roth contributions.
Need Help?
Windes provides individual tax services to high-net-worth individuals, helping minimize taxes and preserve wealth. Contact Windes for proactive guidance and strategic insights to help you navigate complex tax situations.