The IRS has announced new contribution limits for retirement plans, which may provide some relief for Americans looking to save for their future. Starting in 2026, the contribution limit for 401(k) and 403(b) plans, as well as governmental 457 plans and the federal Thrift Savings Plan, will increase to $24,500. This is a rise from the current limit of $23,500 for 2025.
Additionally, the contribution limit for Individual Retirement Accounts (IRAs) will go up from $7,000 in 2025 to $7,500 in 2026. This is a step forward for many workers, especially those aged 50 and above. These savers will be able to make catch-up contributions, allowing an extra $1,100 to their IRAs, increasing from $1,000 this year. This adjustment is part of the SECURE 2.0 Act, which aims to enhance retirement savings options.
For older workers taking advantage of catch-up contributions in 401(k) and similar plans, the limit will rise from $7,500 to $8,000 next year. This means eligible workers could potentially contribute a total of $32,500 in 2026 to these retirement accounts.
Notably, the SECURE 2.0 Act also introduces a higher catch-up contribution limit of $11,250 for those aged 60 to 63. This differentiation acknowledges the unique financial pressures that older workers may face as they approach retirement.
The IRS reviews and adjusts these contribution limits every year based on cost-of-living changes. The increased limits aim to help Americans enhance their retirement savings, a crucial step given the rising cost of living and longer life expectancies.
For taxpayers who qualify, contributions to traditional IRAs are often deductible, but this deduction can phase out based on income and filing status. For singles covered by a workplace retirement plan, the phase-out range in 2026 will rise to between $81,000 and $91,000, up from this year’s range of $79,000 to $89,000.
Couples who file jointly will see their phase-out range increase to between $129,000 and $149,000 if one spouse contributes to an IRA and is covered by a workplace plan. Furthermore, contribution limits for Roth IRAs will also see similar increases, allowing more flexibility for savers.
Experts believe these enhanced limits will empower individuals to save more substantially, addressing the financial challenges of longer retirements and rising expenses. In a time when economic uncertainties persist, these updates from the IRS could play a crucial role in fostering a financially secure future for many Americans.
