Employers that offer qualified retirement plans must stay informed about annual IRS inflation adjustments. These updates impact plan design, payroll processes, and employee communications. For 2026, several key limits have changed. Here’s what you need to know:
Elective Deferrals to Defined Contribution Plans
- 401(k), 403(b), and 457 plans: $24,500 (up from $23,500)
- SIMPLE IRAs: $17,000 (up from $16,500)
- Total contributions to defined contribution plans: $72,000 (up from $70,000)
Catch-Up Contributions
- For participants age 50+: $8,000 (up from $7,500)
- SECURE 2.0 higher catch-up for ages 60–63: $11,250 (unchanged)
- SIMPLE IRA catch-up: $4,000 (up from $3,500); higher limit for ages 60–63: $5,250
SECURE 2.0 Roth Requirement
Starting in 2026, catch-up contributions for employees earning over $150,000 must be Roth contributions. Plan amendments deadline: December 31, 2026.
Defined Benefit Plans
Annual benefit limit: $290,000 (up from $280,000).
SEP-IRAs
Contribution limit: 25% of compensation, up to $72,000. Participation threshold: $800.
Other Key Limits
- Maximum compensation for plan purposes: $360,000
- Highly compensated employee threshold: $160,000
- Key employee threshold: $235,000
- Saver’s credit income limits:
- Married filing jointly: $80,500
- Head of household: $60,375
- Others: $40,250
- Control employee limits: Officers $145,000, others $290,000
- Social Security wage base: $184,500
Action Steps for Employers
Update payroll systems, review plan documents, and communicate changes to employees. Contact us for guidance on implementing these updates and optimizing your retirement plan strategy.
©2026
FAQs
Q1: What is the 401(k) contribution limit for 2026?
A: The elective deferral limit for 401(k), 403(b), and 457 plans is $24,500 for 2026.
Q2: How does SECURE 2.0 affect catch-up contributions in 2026?
A: Employees earning over $150,000 must make catch-up contributions as Roth contributions starting in 2026. Higher catch-up limits apply for ages 60–63.
Q3: What is the Social Security taxable wage base for 2026?
A: The wage base increases to $184,500 for 2026.