The IRS has revealed significant increases in the contribution limits for retirement accounts, effective in 2026, designed to help individuals save more for their retirement. Most notably, the contribution limit for 401(k) plans will rise to $24,500, up from $23,500 in 2025. This increase is part of the annual cost-of-living adjustments that are mandated by law, correlating with inflation and other financial factors.
For those participating in 401(k) plans and similar arrangements, including 403(b) plans, most 457 plans, and the federal government’s Thrift Savings Plan, the new limit applies to employee contributions. Additionally, the catch-up contribution limit for employees aged 50 and over will increase to $8,000 in 2026, allowing participants in these plans to contribute up to $32,500 annually, starting next year. The SECURE 2.0 Act also allows for a higher catch-up contribution limit of $11,250 for individuals aged 60 to 63, maintaining the same level as 2025, thereby enabling these participants to contribute as much as $35,750.
In terms of Individual Retirement Accounts (IRAs), the contribution limit will rise to $7,500, compared to $7,000 in 2025. For those aged 50 and over, the catch-up contribution will increase to $1,100, totaling $8,600. The traditional IRA plans retain their tax advantages, with contributions typically being tax-deductible, thus lowering tax bills and allowing tax-deferred growth until withdrawal.
Phase-out ranges, which determine the levels at which tax deductions for traditional IRA contributions begin to decrease, will also see adjustments. For individuals covered by a workplace retirement plan, the phase-out range for single taxpayers will expand to between $81,000 and $91,000, up from $79,000 to $89,000 in 2025. For married couples filing jointly, this range increases to between $129,000 and $149,000.
Roth IRAs, characterized by their tax-free qualified withdrawals, will adhere to the same total contribution limit of $7,500 for traditional and Roth accounts combined. Roth IRA income phase-outs will also see increments, with the threshold adjusted to between $153,000 and $168,000 for singles and heads of household. Married couples filing jointly will have a phase-out range of between $242,000 and $252,000.
SIMPLE IRA plans, which serve small businesses, will allow contributions to increase to $17,000. For workers aged 50 or above, the catch-up limit will be $4,000, allowing total contributions of $20,500. There is also a higher catch-up limit for those aged 60 to 63 set at $5,250.
The Saver’s Credit, aimed at low- and moderate-income workers for contributions to IRAs or employer-sponsored retirement plans, will have income limits increased to $80,500 for married couples and $40,250 for singles and married individuals filing separately.
Defined benefit plans, though less common today, will see the annual benefit limit raised to $290,000 and contribution limits increase to $72,000 in 2026.
Qualifying longevity annuity contracts (QLACs) will maintain a premium payment limit of $210,000, while the total amount eligible for qualified charitable distributions (QCDs) will rise to $111,000. Lastly, new provisions under the SECURE 2.0 Act will allow domestic abuse victims to make penalty-free withdrawals of up to $10,500 from their retirement accounts.
As these changes roll out in 2026, individuals will have enhanced opportunities to save for their retirement, potentially aiding in a more financially secure future. More detailed information about the adjustments and separate IRS notices will provide guidance on how individuals can best navigate these changes.
