2026 401(k) and IRA Contribution Limits: What Changed and How to Use Them

The IRS bumped up retirement account contribution limits again for 2026, giving savers more room to shelter income from taxes. If you have not looked at your contribution elections since last year, now is a good time, especially with a new high-earner catch-up rule taking effect. Here is exactly what changed and how to make the most of it.

The New 401(k) Limit for 2026

The employee salary deferral limit for 401(k), 403(b), most 457 plans, and the federal Thrift Savings Plan increased to $24,500 for 2026, up from $23,500 in 2025. The combined employee-plus-employer contribution limit rose to $72,000, or 100 percent of your compensation, whichever is lower. If your employer matches contributions, that match counts toward the $72,000 combined cap, not the $24,500 employee limit, so you generally still have plenty of room even with a generous match.

Catch-Up Contributions Got a Boost Too

If you are 50 or older, you can contribute an additional $8,000 on top of the standard limit, for a total of $32,500 in 2026. If you are between 60 and 63, a special super catch-up provision under SECURE 2.0 lets you contribute an additional $11,250 instead of the standard catch-up amount, bringing your total to $35,750. These higher limits only apply if your specific plan allows them, so check with your plan administrator before assuming you qualify.

A New Rule for High Earners: Catch-Up Contributions Must Be Roth

Starting in 2026, if your prior-year FICA wages exceeded $150,000, any catch-up contributions you make, whether the standard $8,000 or the super catch-up $11,250, must go in as Roth, meaning after-tax dollars. This is a meaningful shift for higher earners who previously used traditional catch-up contributions to reduce their current-year taxable income. If your plan does not currently offer a Roth option and you are affected by this rule, you may not be able to make catch-up contributions at all until your plan adds one, so it is worth confirming with HR now rather than in December.

IRA Limits Also Increased

Traditional and Roth IRA contribution limits rose to $7,500 for 2026, up from $7,000. The catch-up contribution for savers 50 and older increased to $1,100, bringing the total to $8,600 for eligible savers. Roth IRA income phase-out ranges also increased, giving slightly more room for moderate earners to contribute directly before needing to consider a backdoor Roth strategy.

Self-Employed? SEP IRA and SIMPLE Limits Increased As Well

Small business owners and self-employed individuals with a SEP IRA can now contribute up to $72,000 for 2026. SIMPLE IRA limits rose to $17,000, or $18,100 for certain applicable SIMPLE plans, with a catch-up contribution of $4,000 for those 50 and older. If you run your own business and have not revisited your retirement plan structure in a while, these increases are worth factoring into your year-end tax planning.

Quick Action Plan

●        If you are under 50, check whether your current contribution rate gets you close to the new $24,500 limit

●        If you are 50-plus, confirm your plan allows the $8,000 catch-up and update your election if needed

●        If you are 60 to 63, ask your plan administrator whether the $11,250 super catch-up is available

●        If your prior-year FICA wages topped $150,000, confirm your plan offers a Roth catch-up option before year-end

●        Update your IRA contribution target to reflect the new $7,500 limit, or $8,600 if you are 50-plus

●        Self-employed savers should revisit SEP or SIMPLE IRA contribution levels with their tax preparer

Final Takeaways

Higher contribution limits only help if you actually adjust your contribution elections to use them. Most people set a 401(k) percentage once and never revisit it, which means these annual IRS increases quietly go unused year after year. Take ten minutes this month to check your current contribution rate against the new 2026 limits, especially if you are near 50, between 60 and 63, or earning above the new $150,000 threshold for Roth catch-up contributions.

Are you on track to hit the new limits this year, or is it time to bump up your contribution percentage? A small adjustment now compounds significantly by retirement.