IRS Confirms 2026 Contribution Limits: What Plan Sponsors Should Know

As we recently projected, the IRS has updated the annual contribution limits for qualified retirement plans, such as 401(k)s and 403(b)s to define how much participants can save on a tax-advantaged basis. The 2026 cost-of-living adjustments, announced in Notice 2025-67, are now official—and as expected, they include modest but meaningful increases that plan sponsors should begin communicating to participants.

Key Limit Changes for 2026

The employee deferral limit for 401(k), 403(b), governmental 457, and Thrift Savings Plan participants will increase to $24,500, up from $23,500 in 2025.

For participants aged 50 and older, the catch-up contribution limit rises to $8,000 (up from $7,500). That means eligible participants can defer up to $32,500 total in 2026—$24,500 in regular contributions plus $8,000 in catch-up contributions.

The super catch-up contribution—a provision from the SECURE Act 2.0 applying to those ages 60 through 63—remains $11,250 for 2026. This expanded limit gives late-career savers a valuable window to accelerate their retirement readiness.

Other Adjusted Limits

The total defined contribution limit—including both employee and employer contributions such as matches or profit sharing—has increased to $72,000 (from $70,000 in 2025).

Meanwhile, the compensation limit—the maximum amount of an employee’s earnings that can be considered when calculating plan contributions—rises from $350,000 to $360,000.

In simple terms, if an employer matches 50% of contributions up to 10% of pay, any salary over $360,000 is excluded from the match calculation.

Catch-Up Contributions and Roth Requirements

A significant regulatory change also takes effect in 2026: Employees earning more than $145,000 (as of 2025 wages) will be required to make any catch-up contributions as Roth contributions—that is, with after-tax dollars.

This change was introduced under SECURE Act 2.0 and impacts higher earners who traditionally used pre-tax catch-ups. Plan sponsors should confirm that their plans support Roth deferrals and coordinate with their recordkeepers and payroll providers to ensure readiness.

Fortunately, most employers are already prepared. Roth options are now extremely common—about 90% of plans have them. But it’s still worth verifying that everything is configured correctly before the rule takes effect.

Next Steps for Plan Sponsors

The updated contribution limits offer plan sponsors a natural opportunity to reengage employees around their retirement goals. Schuppe recommends:

• Communicating early and often. Share the new 2026 limits in newsletters, open enrollment materials, and employee meetings. ‍
• Encouraging participants to adjust their deferral rates to take full advantage of the higher thresholds. ‍
• Reviewing plan operations. Confirm that payroll systems and recordkeepers are aligned on the new Roth catch-up requirement. ‍
• Reinforcing the value of long-term saving. Even small increases in annual contributions can meaningfully improve retirement readiness.

New Year’s Resolutions for 2026

Annual limit changes are an easy entry point for participant education. They help remind employees that saving consistently—and maximizing what the plan allows—is one of the most powerful steps toward a secure retirement.

The new IRS limits reaffirm a familiar theme: saving for retirement is an evolving process that benefits from regular check-ins and informed guidance.

For plan sponsors, now is the perfect time to ensure that systems, communications, and participant engagement strategies are aligned…and that everyone is ready to make the most of 2026’s opportunities.