Contribution Limits for Workplace Retirement Plans Are Increasing for 2026

The Internal Revenue Service has released updated retirement plan contribution limits for the 2026 tax year, and the changes will influence tax planning, business decision making and retirement readiness for millions of workers. These limits apply to 401(k) plans, 403(b) plans, most 457 plans and IRAs. Because workplace retirement plans remain one of the most powerful tax advantaged savings tools available, the new thresholds deserve careful attention from CPAs, tax attorneys and business owners.

What the changes are

For 2026 the standard employee deferral limit for 401(k), 403(b) and similar plans will increase to 24,500 dollars. This represents an adjustment intended to keep pace with inflation and wage growth, and it gives employees additional room to reduce taxable wages or expand tax free retirement accumulation through Roth contributions.

The catch up contribution limit for individuals aged fifty and older will increase to 8,000 dollars. These catch up contributions are often essential for workers who are nearing retirement age and attempting to make up for earlier gaps in savings. The increase provides meaningful flexibility for clients who want to strengthen their retirement accounts during higher earning years.

For individuals between ages sixty and sixty three a special super catch up window created by the SECURE 2.0 Act becomes increasingly relevant. During this period participants may be allowed to contribute roughly one hundred fifty percent of the standard catch up amount, depending on their plan. This elevated contribution opportunity can be especially impactful for taxpayers who are accelerating last minute savings or repositioning assets before retirement.

IRA limits are also increasing for 2026. The annual IRA contribution limit rises to 7,500 dollars, and the IRA catch up for those fifty and older rises to 1,100 dollars. These increases apply to both traditional and Roth IRAs, although income phaseout rules still determine eligibility for Roth contributions and deductibility for traditional IRAs. The adjustments create new planning room for individuals who use IRAs to supplement employer plans or who rely on backdoor Roth strategies.

Another significant change relates to the SECURE 2.0 requirement that certain high earning employees must make their catch up contributions on a Roth basis beginning in 2026. Employees whose wages exceed the statutory threshold will no longer be able to treat their catch up contributions as pre tax. Instead, those contributions must be made after tax, which shifts the benefit toward tax free growth rather than an immediate deduction.

Why these changes matter

For employers the new contribution limits require a careful review of payroll systems, plan documents and employee communication practices. Payroll software must be updated to prevent excess contributions, and plan sponsors must verify that their retirement plans support the Roth catch up requirement. If a plan does not include a Roth feature, the employer may need to amend the plan or risk being unable to offer catch up contributions at all for certain employees.

For CPAs and tax attorneys the new limits directly influence projected taxable income, estimated tax planning and compensation strategies. Higher contribution limits can shift a client from one taxable threshold to another and may change the interplay between retirement savings, qualified business income deductions or itemized deductions. The Roth catch up mandate requires special attention because the change in tax treatment affects both the short term and long term tax strategy for high earning individuals.

Business owners who sponsor retirement plans should begin assessing how these new limits fit into their broader benefit strategies. Owner employees often maximize their own contributions, so the increase affects cash flow planning, entity level tax strategy and the design of employer contributions such as matching or profit sharing. With the super catch up provision and Roth requirements layered in, business owners will need proactive advice to optimize 2026 participation.

What is next

Employers should start preparing for the 2026 plan year by reviewing systems, coordinating with recordkeepers and creating clear educational materials for employees.

Advisors should evaluate client eligibility for the expanded limits, run updated tax projections and prepare strategies that fully leverage the opportunity presented by the higher caps. These changes mark another step in the evolution of retirement policy, and early planning will ensure that both individuals and businesses benefit from the increased flexibility.

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