Overview: Section 415 Limit Changes for 2026
In Notice 2025-67—part of Internal Revenue Bulletin 2025-49—the IRS adjusted limits related to defined benefit and defined contribution retirement plans, effective January 1, 2026.(irs.gov) Key updates:
| Plan Type | 2025 Limit | 2026 Limit |
|---|---|---|
| Defined Benefit Plan maximum annual benefit under section 415(b)(1)(A) | $280,000 | $290,000 (irs.gov) |
| Defined Contribution Plan contributions (section 415(c)(1)(A)) | $70,000 | $72,000 (irs.gov) |
| Elective deferrals (401(k), 457, etc.) under section 402(g)(1), section 457(e)(15) | $23,500 | $24,500 (irs.gov) |
| Catch-up contributions for age-50+ under section 414(v)(2)(B)(i) | $7,500 | $8,000 (irs.gov) |
What This Means for Plan Sponsors & Individuals
These higher thresholds give more room for retirement savings. Here's how different actors should respond:
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Plan sponsors: Update plan documents, payroll systems, and participant notices to reflect the increased limits. Make sure employers enforce new maximum benefit limits for defined benefit plans properly.
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Financial advisors & tax preparers: When advising clients on deferral amounts, especially for those maxing out contributions, the updated limits help enhance tax savings. Budgeting should incorporate whether individuals fully use catch-ups in 2026.
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Individuals: If you contribute to multiple plans (e.g. 403(b) and 401(k)), keep track so you don’t exceed combined limits. Those over 50 should plan to benefit from higher catch-ups.
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High earners & executives: Defined benefit plan limit increase may directly impact planning for those with pensions or cash balance plans. Projection of benefit accruals should factor the new top limit.
Examples
- A participant age 55 in 2026 who contributes max to a 401(k): can defer $24,500, plus catch-up of $8,000, totaling $32,500, up from $31,000 in 2025.
- A defined benefit plan promises 100% of final pay up to the maximum: in 2026, that maximum is $290,000; previously $280,000. That affects estimates of liabilities and employer funding.
Actionable Steps
- Review and revise plan documents to reflect 2026 limits—and ensure auditors and record keepers are aware.
- Communicate to participants especially those who contributed near previous caps, since there’s now room to increase.
- Update payroll and HR systems so wage deferral limits, benefit accruals are capped correctly—avoid under or over-payments.
- Coordinate with financial and tax planning: For those with multiple retirement vehicles, ensure contributions are allocated across to maximize tax benefits without violating combined limits.
Potential Pitfalls & Considerations
- Be mindful of overall tax efficiency—not just maximizing contributions. For example, tax bracket changes under OBBB may affect marginal benefit of deferrals.(irs.gov)
- Some plans have slower administrative processes—don’t assume immediate implementation; delays in updating systems or notices could lead to errors.
- Defined benefit plan sponsors should re-evaluate mortality, funding, and discount rates if benefit limit increases have knock-on effects for plan liabilities.
The new limits under section 415(b) and (c) provide a timely boost for compliant retirement savings. Leveraging them with good planning ensures both individuals and institutions avoid traps while capturing the tax advantages.