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IRS Raises 401(k) Contribution Limits for 2026

Jan 2, 2026 | Regulatory Updates, Retirement Services, Small Business Resources

Retirement services from CPS and Payentry.

IRS Raises 401(k) Contribution Limits for 2026: What Employers and Employees Need to Know

by Mike Meador, Vice President of Corporate Development

 

Each year, the Internal Revenue Service (IRS) adjusts retirement plan contribution limits to keep pace with inflation. These updates give savers the opportunity to put more money toward their long-term retirement goals. For 2026, the IRS has increased the annual limits on 401(k) contributions, presenting a valuable opportunity for employees to boost their retirement savings.

What’s Changing for 401(k) Plans in 2026

 

Starting January 1, 2026, the IRS announced several important updates to 401(k) contribution limits that will affect employees and plan sponsors alike:

  • Standard elective deferral limit increases from $23,500 (2025) to $24,500 (2026).
  • Catch-up contributions for employees age 50 and older rise to $8,000, up from $7,500.
  • Employees between ages 60 and 63 may still qualify for the higher “super catch-up” limit of $11,250 if their plan allows.
  • The total combined contribution limit (employee + employer contributions) increases from $70,000 in 2025 to $72,000 in 2026.

 

These adjustments are part of the annual cost-of-living adjustments (COLA) that the IRS makes to qualified retirement plans.

For the official IRS announcement and complete details, visit the IRS Retirement Plan Limits page.

 

Why These Updates Matter

 

Higher limits mean more opportunity for employees to leverage the tax-advantaged savings that 401(k) plans provide. By increasing contributions, savers can potentially:

  • Reduce taxable income (for pre-tax contributions).
  • Build a larger retirement nest egg with long-term compounding.
  • Take advantage of additional “catch-up” savings if nearing retirement age.

Employers also benefit by offering competitive retirement plan features that help attract and retain talent.

Important Considerations for Plan Sponsors

 

Secure 2.0 and related IRS guidance bring in changes beyond just the contribution limits. For example, certain high-income earners may have new rules regarding how catch-up contributions are treated for tax purposes. Employers and plan sponsors need to review plan design, communications, and reporting to ensure compliance and to support employees effectively.

How Payentry Can Help

 

At Payentry, we understand that keeping up with IRS retirement plan rule changes can be complex. That’s why our retirement plan services are designed to help employers:

  • Navigate annual contribution limit changes.
  • Update plan documents and employee communications.
  • Ensure accurate payroll deferrals and reporting.
  • Provide support and guidance to plan participants.
  • Offer tools that streamline retirement plan administration.

 

Whether you’re updating your current 401(k) plan or considering offering retirement benefits for the first time, Payentry’s experts are here to help you implement best practices and take full advantage of the 2026 contribution changes.

Plan Now for a Stronger Retirement Future

 

The IRS’s 2026 401(k) limits are an opportunity, not just a regulatory update. If you want to empower your employees to save more or review your plan design for the year ahead, now is a great time to take proactive steps.

 

Contact Payentry today to learn how our retirement plan services can support your business and your team in making the most of the 2026 401(k) contribution changes.

 

Let’s Talk. Our personnel management professionals provide expert support in payroll, workforce management, human resources, benefits administration, and retirement planning services.

 

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Learn more about how we can help you achieve your goals, address challenges, and resolve issues with speed and precision by conveniently scheduling an appointment with our team. And to speak directly with an experienced payroll professional, please contact us at 704.632.2940 or simply Click Here and Let’s Talk.

 

* MPAY LLC dba Payentry (Company), is not a law firm. This article is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other Company materials does not create an attorney-client relationship. The Company is not responsible for any inadvertent errors that may occur in the publishing process.

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