The Internal Revenue Service (“IRS”) has announced the following dollar limits applicable to tax-qualified plans for 2026:
- The limit on the maximum amount of elective contributions that a person may make to a 401(k) plan, a 403(b) tax-sheltered annuity, or a 457(b) eligible deferred compensation plan is increased from $23,500 to $24,500.
- The limit on “catch-up contributions” to a 401(k) plan, a 403(b) tax-sheltered annuity, or a 457(b) eligible deferred compensation plan for persons age 50 and older is increased from $7,500 to $8,000.
- As a result of change made by SECURE 2.0, persons aged 60, 61, 62, and 63 who participate in a 401(k) plan, a 403(b) tax-sheltered annuity, or a 457(b) eligible deferred compensation have a higher catch-up contribution limit, which for 2026 is $11,250 instead of $8,000. What this means, is that someone in this age group can elect in 2026 to contribute up to $35,750 ($24,500 + $11,250) to one of these plans.
- SECURE 2.0 added a requirement that employees who had Federal Insurance Contribution Act (“FICA”) wages above a specified dollar amount in the prior calendar year must make any catch-up contributions as Roth (after-tax) contributions. For 2026, the dollar amount that triggers this requirement is $150,000. Importantly, this new rule does not apply to partners and other individuals who have self-employment income rather than FICA wages.
- The dollar limit on the maximum permissible allocation under 401(k) and other defined contribution plans is increased from $70,000 to $72,000.
- The maximum annual benefit that may be earned under a defined benefit plan is increased from $280,000 to $290,000.
- The maximum amount of annual compensation that may be taken into account on behalf of any participant under a tax-qualified retirement plan will go up from $350,000 to $360,000.
- The dollar amount used to identify “highly compensated employees” remains unchanged for 2026 at $160,000.
Additional information regarding benefit plan dollar limits can be obtained in Notice 2025-67, 2026 Amounts Relating to Retirement Plans and IRAs, as Adjusted for Changes in Cost-of-Living.
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