The IRS on November 13, 2025, announced the 2026 retirement plan limits, raising the maximum employee deferral to 401(k), 403(b) and most 457 plans to $24,500 from $23,500 and the IRA contribution limit to $7,500 from $7,000, according to IR-2025-111. The accompanying Notice 2025-67 also raised the overall cap on contributions to a defined contribution account and the wage threshold that determines who must make catch-up contributions on a Roth basis. For high earners, those less-publicized figures often matter more than the headline number.
What changed
| Limit | 2025 | 2026 |
|---|---|---|
| 401(k), 403(b), 457 elective deferrals | $23,500 | $24,500 |
| Catch-up, age 50 and older | $7,500 | $8,000 |
| Higher catch-up, ages 60 to 63 | $11,250 | $11,250 |
| Total defined contribution limit, Section 415(c) | $70,000 | $72,000 |
| IRA contribution | $7,000 | $7,500 |
| IRA catch-up, age 50 and older | $1,000 | $1,100 |
| Compensation that plans may consider | $350,000 | $360,000 |
| Roth catch-up wage threshold | $145,000 | $150,000 |
The notice keeps the highly compensated employee threshold at $160,000 and raises the SIMPLE plan deferral limit to $17,000. Income ranges for direct Roth IRA contributions also moved up: the phase-out runs from $153,000 to $168,000 for single filers and from $242,000 to $252,000 for married couples filing jointly. For traditional IRA deductions, the range for a single filer covered by a workplace plan is $81,000 to $91,000.
Who is affected
Nearly every worker with a workplace plan gets slightly more room. The changes with the biggest dollar impact land on three groups. Employees aged 60 to 63 can defer $24,500 plus $11,250, or $35,750, as KPMG summarized. Employees aged 50 and older whose prior-year wages exceed the Roth catch-up threshold must route catch-up money into a Roth account, taxed now rather than later, if their plan offers catch-ups. And workers whose plans permit after-tax contributions can use the higher $72,000 total cap, which includes employee deferrals, employer contributions and after-tax money.
The after-tax math
Most high-income households are above the Roth IRA income limits, which is why the 2026 figures often shape three separate decisions: pretax or Roth deferrals, whether to use a nondeductible IRA contribution that is later converted, and whether a plan allows after-tax contributions beyond the deferral limit.
Example, with round numbers: a 45-year-old engineer earns $400,000. Her employer contributes $15,000 to her 401(k), and the plan accepts after-tax contributions.
| Contribution type | 2026 amount |
|---|---|
| Elective deferral (pretax or Roth) | $24,500 |
| Employer contribution | $15,000 |
| Remaining room for after-tax contributions under the $72,000 cap | $32,500 |
| Total into the plan | $72,000 |
| Separate IRA contribution, outside the plan | $7,500 |
Only the $24,500 deferral reduces taxable wages if made pretax. The after-tax portion does not, but it can grow in the plan, and some plans allow it to be moved to Roth. Note that the compensation a plan may count is capped at $360,000, which can limit employer contributions calculated as a percentage of pay for the highest earners. If she were 55 and earned more than the wage threshold in the prior year, an $8,000 catch-up would have to go in as Roth, adding to her current taxable income.
Moves to discuss with your advisor
- Whether the plan document permits after-tax contributions and in-plan Roth conversions, and how often.
- How the mandatory Roth treatment of catch-ups changes a 50-plus employee's paycheck withholding in 2026.
- Whether a nondeductible IRA contribution is practical given any existing pretax IRA balances, which affect how a later conversion is taxed.
- For couples aged 60 to 63, coordinating the $11,250 catch-up between both spouses' plans.
What to watch
Employers are updating payroll systems for the Roth catch-up rule, and plans that cannot offer Roth accounts may stop allowing catch-ups for affected employees. Contribution elections for 2026 are typically set during year-end benefits enrollment, so plan-level details released in the coming weeks will determine how much of the new room is actually usable.
Sources
- First reported 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500 (IR-2025-111) — IRS
- Notice 2025-67: 2026 Limitations Adjusted as Provided in Section 415(d), etc. — IRS
- Notice 2025-67: Increased retirement plan contribution limits for 2026 — KPMG
- Inflation adjustments to retirement account limits issued for 2026 — The Tax Adviser (AICPA)
After TAX is an independent publication. Articles are general information, not tax, legal or investment advice. Consult a licensed professional about your situation.
