The IRS has announced updated cost-of-living adjustments for retirement plan contribution limits that will take effect in 2026. The changes apply to 401(k), 403(b), governmental 457 plans, IRAs, SIMPLE accounts and various income-based phase-outs. These adjustments affect how employers structure their benefit programs and how individuals plan for long-term savings.
Key 2026 Contribution Limit Increases
The limit for employees contributing to 401(k), 403(b), most governmental 457 plans and the federal Thrift Savings Plan will increase to $24,500, up from $23,500 in 2025.
IRA contribution limits will increase to $7,500, up from $7,000. The IRA catch-up contribution for individuals aged 50 and older will increase to $1,100, reflecting the annual cost-of-living adjustments established by SECURE 2.0.
For individuals aged 50 and older who participate in 401(k), 403(b), governmental 457 plans and the Thrift Savings Plan, the catch-up contribution limit will increase to $8,000, allowing total contributions of up to $32,500 in 2026.
Under SECURE 2.0, individuals ages 60 to 63 continue to qualify for a higher catch-up limit. For 2026, this enhanced limit remains $11,250.
Updated Phase-Out Ranges
The IRS also increased income phase-out thresholds for traditional IRAs, Roth IRAs and the Saver’s Credit. These changes determine eligibility for deductions or contributions based on filing status and income and generally apply where the taxpayer or the taxpayer’s spouse is covered by a workplace retirement plan, consistent with existing rules. Updated ranges include:
- Traditional IRA deductions for single filers covered by a workplace plan now phase out between $81,000 and $91,000.
- Married couples filing jointly, where the contributor is covered by a workplace plan, will see phase-outs between $129,000 and $149,000.
- For an IRA contributor who is not covered by a workplace retirement plan but is married to someone who is covered, the deduction phases out between $242,000 and $252,000.
- For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range remains between $0 and $10,000 and is not subject to an annual cost-of-living adjustment.
- Roth IRA contribution eligibility phases out between $153,000 and $168,000 for single filers and $242,000 and $252,000 for married couples filing jointly.
- Saver’s Credit eligibility now extends to incomes up to $80,500 for joint filers, $60,375 for heads of household and $40,250 for single filers.
SIMPLE Account Adjustments
SIMPLE plan contribution limits will increase to $17,000, with an enhanced SECURE 2.0 limit of $18,100 for applicable plans that meet certain criteria under SECURE 2.0. The standard catch-up contribution for individuals aged 50 and older will increase to $4,000, while the higher catch-up limit for individuals ages 60 to 63 will remain $5,250.
What These Changes Mean
Employers
These updated limits may require adjustments to plan documents, payroll systems and employee enrollment materials. Employers should prepare for questions from employees regarding increased savings opportunities and confirm that their retirement plan service providers incorporate the 2026 changes well before year-end. Employers sponsoring SIMPLE plans or plans subject to SECURE 2.0 catch-up requirements should ensure they are applying the correct limits based on employee age and plan type.
Business Owners and High-Income Individuals
The increased contribution and phase-out ranges create additional planning opportunities. Business owners may want to evaluate whether their current plan design remains optimal or if the new limits support greater pre-tax or Roth savings. High-income individuals who were previously near phase-out thresholds may gain additional eligibility to contribute or deduct contributions.
Individuals Approaching Retirement
Higher catch-up contributions for individuals aged 50 and older provide expanded opportunities to accelerate retirement savings. Those in the SECURE 2.0 enhanced catch-up age range of 60 to 63 should assess whether the unchanged limit of $11,250 aligns with their retirement timeline and cash flow planning.
To discuss further, please contact KJK’s Estate, Wealth & Succession Planning attorneys at 216.696.8700.