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11/18/2025

IRS Sets 401(k) Annual Contribution Limit for 2026

Source: HR Dive, November 17, 2025

Unlike last year, the agency also announced an increase to the contribution cap for individual retirement accounts.

Employees enrolled in 401(k) plans will be able to contribute up to $24,500 to those plans in 2026, an increase of $1,000 from last year’s cap of $23,500, the IRS announced Thursday. The new annual contribution limit will also apply to 403(b) plans, governmental 457 plans and the Thrift Savings Plan.

Unlike last year, the IRS also announced an increase to the contribution cap for individual retirement accounts, or IRAs, to which participants will be eligible to contribute $7,500. The IRA catch-up contribution limit for individuals ages 50 and over will similarly increase to $1,100 pursuant to provisions of the SECURE 2.0 Act of 2022.

The catch-up rate for those participating in most other plans, including 401(k) plans, will be set at $8,000 next year, up from $7,500 in 2025. A higher limit applies to employees aged 60 through 63, the IRS noted.

Next year’s 401(k) contribution cap adjustment is the largest year-over-year increase by the agency since 2023, when the IRS set a contribution limit $2,000 higher than that of 2022.

The larger increase may show that the IRS accounted for higher inflation levels in 2025 than in previous years, but the size of the increase is not significant otherwise, said Craig Copeland, director of wealth benefits research at the Employee Benefit Research Institute.

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