The Internal Revenue Service has announced, as it does every year, new contribution limits for 401(k) plans that take inflation into account. Through these changes announced in a press release, taxpayers will be able to contribute up to $24,500 to their 401(k) plans through salary deductions during the 2026 fiscal year. According to the IRS, those who have a 401(k), 403(b), government 457, or Savings Plan will be able to contribute a maximum of $32,500 each year starting in 2026. Meanwhile, Americans aged 60 to 63 will be able to save up to $35,750, thanks to the SECURE 2.0 Act of 2022.
Another significant change announced by the IRS affects those over 50 who earn more than $145,000 per year. Starting in 2026, they will have to make 401(k) contributions as Roth, or after-tax, rather than the traditional pre-tax option. In addition to all these changes, the IRS has also announced new limits for individual retirement savings accounts, as well as an increase in income thresholds for Roth IRA contributions.
IRS’s changes for 2026
The United States Internal Revenue Service (IRS) has announced changes applicable for the 2026 fiscal year, through which taxpayers will see an increase in the limits of the amounts they can save. The maximum amount of money they can deposit into their tax-advantaged retirement accounts is increasing to adjust for inflation (cost of living adjustment, COLA). To understand these changes, it is first necessary to clarify some terms:
- What is a 401(k)? An employer-sponsored retirement savings plan (similar to a company pension plan).
- What is an IRA? An Individual Retirement Arrangement, a plan that is opened individually.
- What are “Catch-up” Contributions? Additional amounts allowed for people aged 50 or older so they can “catch up” with their savings before retirement.
Having clarified these terms, here are the new limits:
| Retirement Plan | 2025 Limit | 2026 Limit | Increase |
| Standard 401(k) Contribution | $23,500 | $24,500 | +$1,000 |
| Standard IRA Contribution | $7,000 | $7,500 | +$500 |
| 401(k) “Catch-up” Contribution (Ages 50+) | $7,500 | $8,000 | +$500 |
| IRA “Catch-up” Contribution (Ages 50+) | $1,000 | $1,100 | +$100 |
Other changes
These are not the only changes the IRS has made. It has also proposed changes for workers aged 60 to 63, adjustments to the “Catch-up” contribution, and an increase in the Saver’s Credit limit.
- Workers aged 60-63. Thanks to the SECURE 2.0 Act, in 2026 they will be able to contribute an extra $11,250, reaching a maximum savings of $35,750.
- Mandatory Change for Roth “Catch-up” Contributions for High Earners. This change affects workers aged 50 or older whose annual income exceeds $145,000. The change is that catch-up contributions can no longer be made pre-tax, but must be made as Roth, that is, after-tax. Under this new rule, high earners will have to pay taxes on that catch-up portion now, rather than deferring them until retirement. The idea is that they pay taxes during their highest earning years.
- The income limit for the Saver’s Credit is increasing. The Saver’s Credit is a tax benefit that helps low- and moderate-income individuals reduce their taxes by contributing to a retirement plan. The IRS modification aims to raise the income limits to be eligible for this type of credit, allowing more people to qualify for the credit in 2026.
The IRS is raising retirement savings limits for Americans for 2026 due to inflation, giving people the opportunity to save more. However, the new (and mandatory) tax rules for older high-income savers, which require them to make their catch-up contributions with after-tax dollars, have not been well received by those affected.