IRS Announces 2026 Retirement Account Inflation Adjustments

2026 Retirement Account Inflation Adjustments

For 2026, the employee elective deferral limit for 401(k), 403(b), most governmental 457(b) plans, and the federal Thrift Savings Plan increases to $24,500 (up from $23,500 for 2025).

  • Standard limit (under age 50):
    • Up to $24,500 in salary deferrals.
  • Age 50+ catch-up:
    • Catch-up contributions increase to $8,000 (from $7,500).
    • Total possible employee contribution for age 50+ is $32,500 ($24,500 + $8,000).
  • Special 60–63 catch-up:
    • For employees who are age 60–63 during the year, the special catch-up remains $11,250, allowing total deferrals of up to $35,750.

Under SECURE 2.0, higher-income employees (generally those earning $150,000 or more in the prior year) must make their plan catch-up contributions as Roth (after-tax) contributions if the plan offers a Roth option. For those with self-employment income catch-up contributions are not required to be contributed to a Roth account.

Traditional and Roth IRAs

The IRA contribution limit (traditional and Roth combined) increases to $7,500 for 2026 (from $7,000).

  • Under age 50: up to $7,500, or 100% of compensation if lower.
  • Age 50+ catch-up: the catch-up is now $1,100, so those 50 and older can contribute up to $8,600 total.

Deductibility and Roth eligibility continue to depend on income and access to an employer plan, but the phase-out ranges all increase for 2026. If neither the taxpayer nor the spouse is covered by a retirement plan at work, the phaseouts of the deduction do not apply. For example:

  • Traditional IRA deduction for active participants in an employer plan: phased out starting at $81,000–$91,000 of income for single filers and $129,000–$149,000 for joint filers.
  • Roth IRA contributions: phased out at $153,000–$168,000 for single filers and $242,000–$252,000 for joint filers.
  • For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phaseout range is increased to between $242,000 and $252,000, up from between $236,000 and $246,000 for 2025.
  • If married filing separately, the phase range remains between $0 and $10,000.
  • It is important to remember that the total amount contributed to all of your IRAs (traditional and Roth) cannot exceed the annual maximum contribution limit or 100% of your earned income, whichever is less.

These higher ranges pull more taxpayers into at least partial eligibility.

SIMPLE IRAs and SIMPLE 401(k)s

For 2026, the salary-reduction limit for SIMPLE plans increases to $17,000 (from $16,500). Certain “enhanced” SIMPLE plans may allow up to $18,100 in employee contributions.

  • Standard SIMPLE deferral: up to $17,000.
  • Age 50+ catch-up (most SIMPLE plans): $4,000, for a total of $21,000.
  • Some special SIMPLE arrangements retain a separate higher 60–63 catch-up of $5,250.

Employers must still make either the required matching or non-elective contribution under SIMPLE rules.

SIMPLE IRAs and SIMPLE 401(k)s

For 2026, the salary-reduction limit for SIMPLE plans increases to $17,000 (from $16,500). Certain “enhanced” SIMPLE plans may allow up to $18,100 in employee contributions.

  • Standard SIMPLE deferral: up to $17,000.
  • Age 50+ catch-up (most SIMPLE plans): $4,000, for a total of $21,000.
  • Some special SIMPLE arrangements retain a separate higher 60–63 catch-up of $5,250.

Employers must still make either the required matching or non-elective contribution under SIMPLE rules.

SEP IRAs and Employer Contributions

For SEP IRAs and other employer-only defined contribution plans, the 2026 limit is tied to the overall defined contribution cap and compensation limits:

  • Maximum contribution is generally the lesser of 25% of eligible compensation or $72,000.
  • Only compensation up to $360,000 can be taken into account in the calculation.

Planning Takeaway

These inflation adjustments offer a valuable opportunity to revisit their deferral elections before January 1, 2026. Incremental increases, especially for those over 50 who can take advantage of catch-up contributions, can materially improve long-term retirement readiness. Now is a good time to reach out to your Friedman + Huey advisor to discuss if you are making the right moves:

  • Maximizing available workplace plan deferrals,
  • Coordinating IRA and Roth IRA contributions with plan coverage and
  • Using SIMPLE or SEP arrangements efficiently in closely held businesses.

 

Frequently Asked Questions (FAQs)

1. What are the new retirement contribution limits for 401(k), 403(b), and 457(b) plans in 2026?

For 2026, the employee elective deferral limit for workplace retirement plans increases to $24,500, with a $8,000 catch-up contribution for those age 50 and over. Special catch-up rules allow workers ages 60–63 to contribute up to $35,750 in total.

2. How much can I contribute to a Traditional or Roth IRA in 2026?

The combined IRA contribution limit rises to $7,500, with individuals age 50+ eligible to contribute up to $8,600 total. Income phase-out ranges for deductibility and Roth eligibility also increase for 2026.

3. What are the contribution limits for SIMPLE IRA and SIMPLE 401(k) plans in 2026?

The 2026 salary-deferral limit for SIMPLE plans increases to $17,000, with a catch-up contribution of $4,000 for those age 50+. Certain enhanced SIMPLE plans may allow up to $18,100 in employee contributions.

4. What are the SEP IRA contribution limits for 2026?

SEP IRA contributions are capped at 25% of eligible compensation or $72,000, whichever is lower. Only compensation up to $360,000 counts toward the calculation.

5. Why is it important to review my retirement contributions for 2026 now?

The inflation-driven increases for 2026 create an opportunity to adjust deferral elections, maximize catch-up options, and coordinate your workplace plan with IRA or Roth IRA strategies. Early planning helps improve long-term retirement readiness.

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