IRS Updates 2026 Retirement Plan Contribution Limits: Key Changes

These updates reflect the retirement plan changes available at the time this article was published. Contribution limits and IRS guidelines may change, so please consult a qualified financial advisor and review official government updates before making any decisions.

The IRS has released updated retirement plan limits for 2026, and the changes will affect millions of employees and employers. Higher contribution limits provide more room for saving, but the rules can be complicated, especially for businesses that offer multiple types of plans.

This guide breaks down what is changing, who is affected, and what HR and payroll teams should plan for as 2026 approaches.

Table of Contents

• 401(k), 403(b), and 457 Contribution Limits for 2026

• IRA Contribution Changes for 2026

• New Catch-Up Contribution Amounts for Workplace Plans

• Income Phase Out Ranges for IRA Eligibility

• What Employers Should Do Now

• Excelforce Resources to Support Your Workforce

• Frequently Asked Questions About Changes to 2026 Retirement Plan Contribution Limits (FAQs)

401(k), 403(b), and 457 Contribution Limits for 2026

The IRS increased the employee contribution limit for major employer-sponsored retirement plans. These include 401(k) plans, 403(b) plans, governmental 457 plans, and the federal Thrift Savings Plan.

Key change:

• The annual contribution limit increases to 24,500 dollars, up from 23,500 dollars in 2025.

This adjustment reflects cost-of-living increases and gives employees more room to save for long-term financial security.

Why it matters for employers

Higher limits often lead to more payroll changes, more adjustments during open enrollment, and more communication responsibilities for HR leaders. If you manage payroll in-house, make sure your system is updated before deductions begin for 2026.

IRA Contribution Changes for 2026

Individual Retirement Arrangement (IRA) contribution limits are also rising.

Changes include:

• The standard IRA contribution limit increases to 7,500 dollars, up from 7,000 dollars.

• The catch-up contribution for individuals age 50 or older increases to 1,100 dollars, up from 1,000 dollars.
  This catch-up amount is now adjusted annually due to SECURE 2.0 legislation.

These increases support workers who save outside an employer-sponsored plan or who supplement their workplace contributions.

New Catch-Up Contribution Amounts for Workplace Plans

Employees age 50 or older can contribute more than the standard retirement plan limit. These catch-up contributions help older workers accelerate savings later in their careers.

Updates for 2026:

• The general catch-up limit increases to 8,000 dollars, up from 7,500 dollars in 2025.

• Starting in 2026, many participants who are age 50 and older will be able to contribute a combined total of 32,500 dollars to their retirement plan.

Special catch-up rule for ages 60 to 63

SECURE 2.0 created a higher catch-up tier for individuals ages 60, 61, 62, and 63.

For 2026, this enhanced limit remains 11,250 dollars. This is higher than the standard 8,000 dollar catch-up limit.

Income Phase Out Ranges for IRA Eligibility

The IRS also updated income thresholds that affect whether contributions to traditional and Roth IRAs are deductible or allowed.

Traditional IRA deduction phase-outs for 2026:

• Single taxpayers covered by a workplace retirement plan: Between 81,000 and 91,000 dollars

• Married filing jointly, spouse making the IRA contribution is covered: Between 129,000 and 149,000 dollars

• Contributor is not covered, but spouse is covered: Between 242,000 and 252,000 dollars

• Married filing separately and covered by a workplace plan: Remains 0 to 10,000 dollars

These ranges determine whether taxpayers can deduct IRA contributions on their return, which affects overall tax planning.

What Employers Should Do Now

Retirement plan updates require preparation from HR teams, payroll administrators, and business owners.

Take action by:

• Reviewing your payroll software to confirm 2026 deduction limits will load correctly.

• Updating employee communication materials.

• Notifying employees of the new contribution limits during onboarding and open enrollment.

• Checking with your plan administrator or financial advisor to ensure all plan documents reflect SECURE 2.0 requirements.

If your current system makes these updates difficult, you may want to evaluate a platform that automates payroll rule changes and reduces the risk of manual errors.

Excelforce Resources to Support Your Workforce

If staying ahead of tax, payroll, and compliance changes is overwhelming, Excelforce can help you:

• Automate payroll and retirement plan deductions

• Provide personalized support from a dedicated payroll specialist

• Reduce manual work and eliminate repetitive processes

You can also explore our recent blog posts, including:

• The 2025 Big Beautiful Bill Act Explained: Key Payroll and HR Impacts for Employers

• Open Enrollment Guide for Employers: Checklist and FAQs
  

• Best Practices for Payroll Processing

Frequently Asked Questions About Changes to 2026 Retirement Plan Contribution Limits (FAQs)

©2025 - Content on this blog is intended to provide helpful, general information. Because laws and regulations evolve, please consult an HR professional or legal expert for guidance specific to your situation.