The IRS has announced the annual cost-of-living adjustments to retirement contribution limits for 2026. While these increases are modest, they provide additional opportunities for retirement savers to set aside funds for their future.
401(k) Contribution Limits Increase to $24,500
The annual contribution limit for 401(k), 403(b), and similar employer-sponsored plans increases to $24,500 for 2026, up from $23,500 in 2025. This $1,000 increase reflects the standard cost-of-living adjustment.
Catch-up contribution limits for older workers also receive adjustments:
- Ages 50-59: Additional $8,000 catch-up (total: $32,500)
- Ages 60-63: Higher catch-up of $11,250 (total: $35,750)
- Ages 64+: Standard $8,000 catch-up (total: $32,500)
IRA Limits Rise to $7,500
Traditional and Roth IRA contribution limits increase to $7,500 for 2026, up from $7,000. The catch-up contribution for those 50 and older increases to $1,100, bringing the total potential IRA contribution to $8,600.
Updated Income Thresholds
The income ranges that determine eligibility for IRA deductions and Roth contributions have been adjusted upward. For traditional IRA deductions (if covered by a workplace plan):
- Single filers: Phase-out between $81,000-$91,000
- Married filing jointly: Phase-out between $129,000-$149,000
For Roth IRA contributions:
- Single filers: Phase-out between $153,000-$168,000
- Married filing jointly: Phase-out between $242,000-$252,000
SIMPLE Plan Updates
SIMPLE retirement plan contribution limits increase to $17,000 (or $18,100 for certain enhanced SIMPLE plans). Catch-up contributions for those 50 and older increase to $4,000 for most SIMPLE plans.
Planning Considerations
These updated limits provide opportunities to:
- Reduce current taxable income through traditional contributions
- Build tax-free retirement income with Roth contributions
- Take full advantage of employer matching programs
The increases, while modest, can accumulate meaningful value over time through compounded growth.
Review Your Strategy
With these new limits in place, it may be worth reviewing your current retirement savings approach. Consider whether you're maximizing available opportunities and whether your contribution mix aligns with your tax situation and retirement timeline.
If you have questions about how these changes affect your specific situation or need guidance on the tax aspects of retirement planning, please reach out to your accountant or our office at 614-891-5423. We're here to help navigate the complexities and make your planning a little #LessTaxing.