What to Know About 401(k) and IRA Contribution Limit Increases in 2026

As inflation-adjusted updates roll out for retirement savings plans, the IRS has announced higher contribution limits for 401(k)s and IRAs in 2026. These increases give older workers the chance to boost their savings as they approach retirement.

Higher Limits Across the Board

Starting in 2026, the annual contribution limit for 401(k), 403(b), and most 457 plans will rise to $24,500, up from $23,500 in 2025. This change allows employees to set aside more pre-tax or Roth dollars in workplace retirement plans.

For traditional and Roth IRAs, the contribution limit will increase to $7,500, up from $7,000. The increases may be small, but they can make a meaningful impact over time, particularly when paired with employer matches or long-term compounding.

Extra Savings Opportunities for Older Workers

Catch-up contributions remain a key advantage for workers age 50 and older. In 2026:

• 401(k) participants age 50 and up can contribute an additional $8,000, for a total of $32,500.
• Participants aged 60 to 63 can contribute even more, up to $35,750, as part of a temporary provision introduced by the SECURE 2.0 Act.

IRA catch-up contributions are also being adjusted for inflation. In 2026, those 50 and older will be allowed to contribute an additional $1,100, up from the long-standing $1,000 limit.

These increases help older workers nearing retirement age maximize their savings in the final stretch of their careers.

A New Requirement for High Earners making catch-up contributions

For higher-income earners, catch-up contribution strategy may need to shift. Starting in 2026, workers earning more than $145,000 (in 2025 income), will be required to make 401(k) catch-up contributions to a Roth account, rather than a traditional pre-tax 401(k).

This change, part of the SECURE 2.0 Act, means:

• High earners will no longer receive the upfront tax deduction on their catch-up contributions.
• Instead, funds will go into a Roth 401(k), where they grow tax-free and can be withdrawn tax-free in retirement.

While this removes an immediate tax benefit, Roth accounts can be strategically valuable—especially for retirees who want to manage their taxable income later in life. Roth withdrawals don’t count toward income thresholds that determine higher Medicare premiums or increased taxation on Social Security benefits.

Please note: If an employer’s plan doesn’t offer a Roth 401(k), affected high earners won’t be able to make catch-up contributions at all in 2026. Fortunately, Roth access is becoming more common, but taxpayers who are considering catch-up contributions in 2026 should consult with their plan administrator.

Bigger Picture Limits

While most employees are subject to the standard $24,500 limit, some defined contribution plans allow much higher contributions when you factor in employer matching or after-tax contributions.

In 2026:

• The total contribution limit (including employee, employer match, and after-tax contributions) will rise to $72,000 for a defined contribution plan.
• Older workers eligible for catch-up contributions may be able to contribute up to $83,250, depending on age and plan structure.

These higher limits can create valuable planning opportunities—especially for high earners or employees with strong employer contributions.

At LMC, we help clients make the most of changing retirement rules—balancing tax efficiency, long-term planning, and evolving legislation.

For questions about how the new 2026 limits may impact your savings strategy, contact an LMC professional.