2026 Contribution Limits Are Coming

What Plan Sponsors and Participants Should Know

Each fall, the IRS releases updated contribution limits for qualified retirement plans such as 401(k)s and 403(b)s. These figures, adjusted annually for inflation, help plan sponsors and participants understand how much they can save on a tax-advantaged basis in the year ahead.

While the official 2026 numbers are expected to be announced in late October or early November, projections already give us a good idea of what to expect…and what plan sponsors should be doing now to prepare.

Anticipated Changes to 2026 Contribution Limits

For 2025, the employee deferral limit for 401(k) and 403(b) plans is $23,500. Early estimates suggest that this will increase by roughly $1,000 for 2026, bringing the new limit to about $24,500.

Meanwhile, the catch-up contribution limit—available to participants age 50 and older—is expected to rise from $7,500 to $8,000. These increases, while modest, represent an opportunity for participants to revisit their savings rates and ensure they’re taking full advantage of the higher thresholds.

In addition to the standard catch-up, the SECURE Act 2.0 introduced an expanded provision known as the “super catch-up,” for workers aged 60 to 63. This allows eligible participants to contribute 150% of the standard catch-up limit. For 2025, that figure is $11,250, and projections suggest it will rise to $12,000 in 2026.

These provisions are designed to help individuals who may be behind on retirement savings to “catch up” during their final working years. By definition, a catch-up contribution is exactly that: it allows individuals who may have under-saved historically to set aside more on a tax-preferred basis as they get closer to retirement age.

Total Contribution and Compensation Limits

In addition to the employee deferral limits, the IRS also caps the total contributions that can be made to a defined contribution plan, combining both employee and employer contributions (such as a company match or profit-sharing).

For 2025, this combined total limit (under Section 415[c] of the Internal Revenue Code) is $70,000, and it’s expected to increase to $72,000 for 2026.

The annual compensation limit, which determines the maximum amount of an employee’s earnings that can be considered for plan purposes (such as calculating matching contributions), is projected to increase from $350,000 to $360,000.

In practical terms, that means if an employer matches 50% of contributions up to 10% of an employee’s total compensation, any salary above that $360,000 threshold in 2026 would be excluded from the calculation of allowable contributions.

Important Catch-Up Rule Change for Higher Earners

One of the most significant regulatory changes taking effect in 2026 involves how catch-up contributions are handled for high-income participants.

Under SECURE Act 2.0, anyone earning more than $145,000 in 2025 will be required—starting on January 1, 2026—to make any catch-up contributions as Roth contributions (after-tax, that is), rather than pre-tax.

This is an important change for plan sponsors and participants alike. Higher earners who wish to make catch-up contributions will need to ensure their plan supports Roth deferrals, and plan sponsors should coordinate with their recordkeepers and payroll providers to ensure a smooth transition.

Fortunately, most plans are already equipped to handle Roth contributions. Still, plan sponsors who haven’t yet added a Roth feature—or who need to confirm that their systems can accommodate the change—should do so well in advance of the 2026 deadline.

Action Steps for Plan Sponsors

As the new limits are finalized, plan sponsors can take several proactive steps to help employees prepare:

• Communicate early. Use the fall announcement as an opportunity to remind participants about the benefits of maximizing their contributions.
• ‍Encourage participants to revisit savings rates. Employees may need to adjust deferral percentages to take advantage of the higher limits in 2026.
• ‍Coordinate with vendors. Confirm that payroll systems and recordkeepers are aligned—especially regarding the new Roth catch-up requirement.
• ‍Educate participants. Include reminders in year-end communications or open enrollment materials to help participants understand how these changes affect them.

Annual limit changes are an important part of a broader participant education strategy. They give plan sponsors a reason to reengage employees around saving for retirement and to make sure everyone’s taking full advantage of what’s available to them.

Looking Ahead

The IRS’s official 2026 contribution limits are expected within the next few weeks. Once announced, LoVasco Consulting Group will publish an update summarizing the confirmed figures and their implications.

In the meantime, we encourage plan sponsors to get a head start. Now is a great time to ensure that both your plan and your participants are ready to make the most of these increases when the new year begins.