What Individuals and Employers Need to Know About the Latest IRS Updates

The Internal Revenue Service has released the official contribution limits for retirement accounts in 2026, and thanks to inflation-related cost-of-living adjustments (COLAs), nearly all thresholds have increased. These changes affect 401(k), 403(b), 457, IRA, Roth IRA, SIMPLE, and Thrift Savings Plan contributions, and they create new opportunities for taxpayers to save more for retirement.

Whether you’re an employee, self-employed, or a business owner offering retirement plans, understanding the 2026 contribution limits can help you optimize your tax strategy.

Key Contribution Limits for 2026

Employer-Sponsored Plans (401(k), 403(b), 457, TSP)

• Employee contribution limit: $24,500 (up from $23,500 in 2025)
• Catch-up contribution for age 50 and older: $8,000 (up from $7,500)
• Total potential contribution (employee + catch-up): $32,500

IRA Contributions

• Annual limit: $7,500 (up from $7,000)
• Catch-up for age 50+: $1,100 (adjusted from $1,000 via SECURE 2.0)

SIMPLE IRA Plans

• Contribution limit: $17,000 (up from $16,500)
• Catch-up for age 50+: $4,000 (up from $3,500)
• Higher catch-up for ages 60–63: remains at $5,250 under SECURE 2.0

Higher Limits for Certain Workers:
Under SECURE 2.0, employees aged 60–63 may be eligible for a special higher catch-up of $11,250 for employer plans, depending on plan adoption.

Income Phase-Out Ranges

Traditional IRA Deductibility
Eligibility to deduct traditional IRA contributions phases out at the following income levels:

• Single filer, covered by a workplace plan: $81,000–$91,000
• Married filing jointly, contributor covered by workplace plan: $129,000–$149,000
• Married filing jointly, contributor not covered, spouse is: $242,000–$252,000
• Married filing separately, covered by a plan: $0–$10,000 (unchanged)

Roth IRA Contributions

• Single/head of household: $153,000–$168,000
• Married filing jointly: $242,000–$252,000
• Married filing separately: $0–$10,000 (unchanged)

Saver’s Credit Eligibility
This credit helps low- and moderate-income individuals save for retirement:

• Married filing jointly: Up to $80,500
• Head of household: Up to $60,375
• Single or MFS: Up to $40,250

Planning Considerations for 2026

• Maximize Contributions: If your cash flow allows, contribute the maximum to your retirement plans, especially if you're over 50 and eligible for catch-up contributions.
• Revisit Roth Conversions: With the expanded income ranges, more taxpayers may benefit from Roth IRA contributions or conversions.
• Update Payroll Withholdings: Employers should update systems to reflect new contribution ceilings.
• SIMPLE vs. 401(k): For small business owners, higher limits may make 401(k) plans more attractive than SIMPLE IRAs in 2026.
• Secure 2.0 Impact: Remember that some catch-up contributions must now be made on a Roth basis if wages exceed $145,000 (consult your advisor for plan compliance).

Inflation may be challenging in day-to-day spending, but it offers a silver lining for retirement savers. The increased limits for 2026 create more tax-advantaged space to grow your nest egg.

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