The Internal Revenue Service (IRS) has announced the cost-of-living adjustments for pension plans and other retirement-related items for the 2026 tax year. These adjustments will allow employees to save more for retirement through their workplace plans and individual accounts.
Key Contribution Limit Changes
- 401(k), 403(b), and 457 Plans. The annual contribution limit for employees participating in 401(k), 403(b), 457 plans, and the federal government’s Thrift Savings Plan will increase to $24,500 for 2026, up from $23,500 in 2025.
- IRA Contributions. The limit on annual contributions to an IRA will increase to $7,500, up from $7,000.
- Overall Defined Contribution Limit. The limit on total annual contributions to a defined contribution plan (employer plus employee) generally increases from $70,000 to $72,000.
Updates to Catch-Up Contributions
There are notable changes to catch-up contributions for older workers:
- Standard Catch-Up (Age 50+). The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), and most 457 plans will increase to $8,000, up from $7,500 in 2025.
- “Super Catch-Up” (Ages 60-63). Under the SECURE 2.0 Act, a higher catch-up contribution limit applies specifically to employees aged 60, 61, 62, and 63. For 2026, this limit remains at $11,250.
- IRA Catch-Up. The catch-up contribution limit for IRAs for individuals aged 50 and over includes a cost-of-living adjustment and will increase to $1,100.
Next Steps for Employers
To ensure compliance and help employees take advantage of these changes, employers should:
- Update Payroll Systems: Adjust payroll systems to accommodate the new contribution limits for 2026, including the specific catch-up amounts.
- Verify Catch-Up Administration: Ensure your plan administrator and payroll provider are prepared to manage the standard catch-up ($8,000) as well as the higher catch-up for employees aged 60-63 ($11,250).
- Communicate with Employees: Notify employees of the increased limits so they can review their contribution elections for the upcoming year.
