What’s Changing in 2026
The IRS has raised contribution limits for key retirement accounts starting in 2026: 401(k), 403(b), 457 plans and the Thrift Savings Plan limits increase to $24,500 (from $23,500 in 2025). The IRA contribution limit moves up to $7,500, and catch-up contributions for participants aged 50+ vary depending on plan type. (irs.gov)
Breakdown of the Adjustments
| Account Type | 2025 Limit | 2026 Limit | Notes |
|---|---|---|---|
| 401(k)/403(b)/457/TSP | $23,500 | $24,500 | Maintains age-based catch-ups; age 60-63 have higher thresholds under SECURE 2.0. (irs.gov) |
| IRA Contribution | $7,000 | $7,500 | Affected by whether filer or spouse is covered by workplace plans. (irs.gov) |
| Catch-up (50+) | $7,500 (for some plans) | $8,000 | Higher catch-up ($11,250) continues for those aged 60-63 in certain plans. (irs.gov) |
Actionable Steps to Maximize the Benefit
- Review your age class: If you're aged 60-63 and working in a plan that allows the higher catch-ups per SECURE 2.0, adjust contributions accordingly.
- Check employer plan rules: There may be deadlines to change your elective deferral percentage or contribution elections—don’t miss them.
- Traditional vs Roth IRAs: Know your eligibility for deduction or contribution phase-outs. The income ranges for deductible traditional IRA contributions, Roth IRA eligibility, and the Saver’s Credit have all shifted upward. (irs.gov)
- Budget for cash flow: Higher contributions reduce take-home pay in the short term—plan your budget, especially during the holidays or big-expense months.
Compliance Tips for Employers and Plan Administrators
- Update payroll systems to recognize the new contribution limits before 2026.
- Communicate changes to employees: send notices, hold education sessions.
- For SIMPLE IRA plans, note that catch-ups also adjust; ensure administrators know which plans allow which limits.
Example Scenario
Imagine Lisa, aged 62, contributing to a 401(k) plan in 2026. She could contribute the base $24,500 plus the higher catch-up amount ($11,250 under SECURE 2.0) for a total possible deferral of $35,750. If Lisa’s employer also offers matching, her total retirement savings surge compared to 2025.
Final Thoughts
Raising retirement contributions offers a big opportunity for your long-term tax and savings strategy—especially if you're in your fifties or early sixties. Confirm your eligibility, update your settings early, and consider consulting with a financial professional to ensure every dollar works for your retirement—and your tax benefit.