2025-2026 Retirement Plan Contribution Limits You Need to Know

Source: WASHINGTON The Internal Revenue Service today announced cost of living adjustments applicable to dollar limitations for pen

Source: 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500 | Internal Revenue Service

⚠️Note: This information is for informational purposes only and does not constitute formal tax, legal, or compliance advice. Always consult with qualified tax advisors, legal counsel, and your organization’s internal teams for guidance specific to your situation. Additional regulations may apply. For the most accurate and up-to-date information, refer to official government resources and regulatory agencies.  

The IRS released the official cost-of-living adjustments for retirement plans – along with key SECURE 2.0 changes that will impact high-income earners, SIMPLE plans, and catch-up contributions. Here is a clear breakdown of what’s changing and what plan sponsors, payroll teams, and financial professionals should prepare for.

Table of Contents

• Secure 2.0 Updates and Major Retirement Plan Contribution Limit Highlights for 2026
• Mandatory Roth Catch-Up Starts in 2026
• 2025 vs 2026 Contributions Limits (Quick View)
• Annual Plan Limits Under §415
• TLDR: What Employers Should Know

Secure 2.0 Updates and Major Retirement Plan Contribution Limit Highlights for 2026

Higher contribution limit across the board

401(k), 403(b), 457(b), and Thrift Savings Plan (TSP)

• $24,500 elective deferral limit (up from $23,500 in 2025)
• $8,000 catch-up for age 50+ (up from $7,500)
• $11,250 enhanced catch-up for those turning 60-63

Note: elective deferrals are the portion of employee pay that the employee chooses to contribute to a retirement plan (pre-tax or Roth), separate from employer contributions

Traditional IRA Contributions:

• $7,500 contribution limit
• $1,100 age 50+ catch-up
• Deduction phase-out ranges (covered by workplace retirement plan):
  • Single/head of household: $81,000 - $91,000
  • Married filing jointly (contributor covered): $129,000 - $149,000
  • Married filing jointly (contributor not covered, spouse covered): $242,000 - $252,000
  • Married filing separately: $0 - $10,000
• Special notes:
  • If neither spouse is covered by a workplace plan, phase-outs do not apply
  • Phase-out ranges are indexed annually for cost-of-living adjustments
• SIMPLE IRA & SIMPLE 401(k):
  • $17,000 contribution limit
  • Up to $18,100 for eligible higher-contribution employers
  • Special catch-up of $5,250 for ages 60-63
• Roth IRA Contribution Limits
  • 2026 phase-out ranges:
    • Single/head of household: $153,000 - $168,000
    • Married filing jointly: $242,000 - $252,000
    • Married filing separately: $0 - $10,000

Roth contributions are made with after-tax dollars, but qualified distributions are tax-free

Savers Credit (Retirement Savings Contribution Credit)

• 2026 income limits
  • Single / Married filing separately: $40,250
  • Married filing jointly: $50,500
  • Head of Household: $79,000

Low- and moderate-income workers may qualify for a non-refundable tax credit based on contributions to retirement plans.

Mandatory Roth Catch-Up Starts in 2026

A major SECURE 2.0 change takes effect: if an employee earned more than $150,000 in FICA wages from the employer in the prior year, all catch-up contributions must be made as Roth.

This applies to:

• Participants age 50+ in 401(k), 403(b), or governmental 457(b) plans
• Prior year FICA wages from the employer exceeded $150,000
• Once standard pre-tax contribution is reached, any additional catch-up contribution must be Roth

Does not apply to:

• SIMPLE IRA
• SIMPLE 401(k)
• SEP IRA
• Certain special 403(b) and 457(b) catch-ups

Employer action: payroll and plan systems must be configured to automatically direct catch-up contributions to Roth when the threshold is met. Failure to do so could lead to compliance issues.

2025 vs 2026 Contributions Limits (Quick View)

401(k) / 403(b) / 457(b) / TSP

• After age 63, employees revert to the standard 50+ catch-up.
• The Roth catch-up rule only applies after reaching the standard limit.

IRA’s

• The Roth IRA contribution limit includes the 50+ catch-ups to the base limit.
• Deductions and Roth eligibility are phased out based on income and filing status. Employers do not need to track this, but employees may need guidance.

SIMPLE IRA / SIMPLE 401(k)

•  Enhanced contribution limits apply only to certain employers designated as “eligible” under SECURE 2.0 rules.
• The Roth catch-up rule does not apply to SIMPLE plans.

Annual Plan Limits Under §415

Defined Contribution (DC) Plans

• 2025 limit: $70,000
• 2026 limit: $72,000

Note: includes employer contributions, employee contributions, and catch-up contributions (Roth or pre-tax)

Defined Benefit (DB) Plans

• 2025 maximum benefit: $280,000
• 2026 maximum benefit: $290,000

Employers must ensure that total contributions do not exceed these limits.

TLDR: What Employers Should Know

• Roth Catch-Up Rule
  • Applies only if prior-year FICA wages > $150,000 and the employee hits the standard elective deferral limit.
  • Does not apply to SIMPLE or SEP plans.
• Age 60-63 Enhanced Catch-Up
  • Eligible employees can contribute more than the standard 50+ catch-up; payroll systems must account for this.
• Elective Deferrals vs. Employer Contributions
  • Only employee-chosen contributions count toward elective deferral limits; employer contributions are separate.
• IRA Phase-Outs and Roth Limits
  • Deduction eligibility and Roth contributions are reduced or eliminated based on income and filing status.
• SIMPLE Plan Enhanced Limits
  • Enhanced contribution limits apply only to certain eligible plans; not all employees or employers qualify.
• Total Annual Contribution Limits
  • Includes all contributions (employee + employer + catch-up). Exceeding these limits can cause compliance issues.

What This Means for Payroll Teams—and How Greenshades Helps