The Internal Revenue Service (IRS) has announced significant increases to the annual contribution limits for workplace and individual retirement plans for the tax year 2026. These adjustments, which are part of the IRS’s standard cost-of-living corrections, aim to help retirement savers stay ahead of inflation and shelter a larger portion of their income from taxes.
Increased Limits for Workplace Retirement Plans
For the tax year 2026, the annual contribution limit for popular workplace retirement savings plans—including 401(k), 403(b), and most 457 plans—will increase to $24,500. This is a notable increase of $1,000 from the $23,500 limit that applied in 2025.
Boosting Catch-up Contributions for Older Workers
The IRS also raised the special catch-up limits designed for older participants to help them accelerate their retirement savings:
- Standard Catch-up: For participants aged 50 and over, the catch-up contribution limit will rise to $8,000, up from $7,500 in 2025. This means an eligible worker aged 50 or older can contribute a total of $32,500 ($24,500 standard plus $8,000 catch-up) to their 401(k).
- “Super Catch-up” Provision: For participants aged 60, 61, 62, and 63, a separate, higher “super catch-up” limit of $11,250 will remain unchanged from 2025, as mandated by the SECURE 2.0 Act.
IRA Limits Also Rise
Individual Retirement Account (IRA) savers will also benefit from the inflation adjustments:
- The annual contribution limit for Traditional and Roth IRAs climbs to $7,500 for 2026, up from $7,000 in 2025.
- The IRA catch-up contribution for contributors aged 50 and over will increase to $1,100, up from $1,000.
Expanding Eligibility and Tax Credits
Beyond the contribution limits, the IRS has also raised income thresholds for several key provisions, which directly benefits moderate-income savers:
- The income thresholds for the eligibility phase-out for both deductible traditional IRAs and Roth IRAs have been raised. This allows a greater number of taxpayers, particularly high earners, to maximize the tax advantages of these accounts.
- The income thresholds for the Saver’s Credit (Retirement Savings Contributions Credit) were also raised, providing a larger potential benefit for moderate-income savers who contribute to a retirement plan.
As CBS MoneyWatch reported, without these annual inflation-driven increases, individuals would have a harder time sheltering income from taxes and protecting the purchasing power of their savings.
Opportunities and Challenges
Retirement savings advisers cited in The Sun see the higher limits as a significant, renewed opportunity for individuals with the capacity to save more. However, experts caution that despite the legal increases, many Americans are unable to take full advantage. According to Vanguard research cited by CBS News, only about 4 out of 10 working Americans feel they are on track to maintain their current lifestyle in retirement, and only approximately 14% of Americans maxed out their 401(k) contributions in 2024.
Furthermore, retirement advisers point out that not all employers permit the higher catch-up contributions, and high earners should be aware of new SECURE 2.0 rules: for the tax year 2026, catch-up contributions made by participants who earned over a certain threshold (indexed to inflation) in the prior year must be made on a Roth (after-tax) basis, which may alter the traditional tax-deferral benefits.