Retirement Contribution Limits Rise for 2026: Higher 401(k) and IRA Caps Announced

The IRS has released its annual cost-of-living adjustments for retirement plans, and 2026 will bring higher contribution limits across nearly every major savings vehicle.

According to IR-2025-111 and Notice 2025-67, both issued November 13, 2025, the contribution caps for 401(k) and IRA accounts are rising to keep pace with inflation, a welcome boost for savers looking to set aside more for retirement.

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1. 401(k) Contribution Limit Increases to $24,500

Employees who participate in 401(k), 403(b), 457, or the Thrift Savings Plan can contribute up to $24,500 in 2026, a $1,000 increase from 2025's limit of $23,500.

For workers aged 50 and older, the catch-up contribution rises from $7,500 to $8,000, meaning those participants can save up to $32,500 in total.

Under the SECURE 2.0 Act, there's also a special higher catch-up tier for individuals aged 60 to 63. That limit stays at $11,250 for 2026, offering older workers a final push before retirement.

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2. IRA Contribution Limit Now $7,500

The annual contribution cap for both Traditional and Roth IRAs increases from $7,000 to $7,500.

The catch-up limit for those 50 and older also receives a cost-of-living adjustment under SECURE 2.0, it rises from $1,000 to $1,100 for 2026.

That means someone age 50 or above can contribute up to $8,600 in total.

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3. Income Phase-Out Ranges Also Increase

The IRS raised the income thresholds that determine eligibility for IRA deductions, Roth IRA contributions, and the Saver's Credit:

• Traditional IRA deductions

  • Single filers covered by a workplace plan: $81,000 – $91,000 (up from $79,000 – $89,000)

  • Married filing jointly (contributor covered): $129,000 – $149,000 (up from $126,000 – $146,000)

  • Non-covered spouse of a covered participant: $242,000 – $252,000 (up from $236,000 – $246,000)

• Roth IRA contributions

  • Single or head of household: $153,000 – $168,000 (up from $150,000 – $165,000)

  • Married filing jointly: $242,000 – $252,000 (up from $236,000 – $246,000)

• Saver's Credit

  • Married filing jointly: eligible up to $80,500 of income (up from $79,000)

  • Heads of household: up to $60,375 (up from $59,250)

  • Singles and married filing separately: up to $40,250 (up from $39,500)

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4. SIMPLE and SEP Plans Get Boosts Too

• SIMPLE IRA or SIMPLE 401(k) elective deferral limit: $17,000, up from $16,500.

• Higher limit for certain eligible SIMPLE plans: $18,100 (up from $17,600).

• Catch-up contribution for workers 50 and older: $4,000, up from $3,500.

• The enhanced catch-up for ages 60 to 63 remains $5,250.

Meanwhile, the SEP IRA compensation threshold for eligibility rises from $750 to $800.

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5. Defined Benefit and Contribution Plan Caps Adjusted

For 2026:

• Maximum defined benefit pension limit: $290,000 (up from $280,000).

• Defined contribution plan limit under §415(c): $72,000 (up from $70,000).

• Annual compensation limit under §401(a)(17): $360,000 (up from $350,000).

These changes reflect the IRS's annual cost-of-living adjustment process, designed to preserve the real value of retirement benefits amid inflation.

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What This Means for Savers

For individuals and small businesses alike, 2026 offers new opportunities to save more aggressively:

• Workers 50 and older can put away up to $32,500 in a 401(k) and $8,600 in an IRA.

• Higher income thresholds expand access to deductible IRA and Roth IRA contributions.

• SIMPLE and SEP plan limits make it easier for small business owners to reward and retain employees.

These updates continue the IRS's broader effort to align retirement saving with real-world wage growth and inflation.

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How Margen Can Help

If you're unsure how these new limits affect your tax planning or employee benefits, Margen can help you model contribution strategies and eligibility thresholds in real time. You can ask questions like:

"How much can I contribute to my 401(k) in 2026 if I'm 52?"

"Does my income phase me out of a Roth IRA next year?"

"Should I switch from a SIMPLE IRA to a 401(k) to maximize savings?"

Margen uses current IRS notices to verify limits automatically, helping you optimize retirement planning before the 2026 tax year begins.

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For full details, see IRS Notice 2025-67 and press release IR-2025-111.