What’s New for 2026?

On November 13, the IRS announced updated contribution limits for 401(k) and 403(b) plans. These changes impact elective deferrals, catch-up contributions, and overall plan limits. Here’s a quick summary:

2026 Retirement Contribution Limits

Plan Limits 2026 2025 Difference
Maximum employee elective deferral (for ages 49 and younger)$24,500 $23,500 $1,000
Employee catch-up contributions (for ages 50-59 and 64 or older) $8,000 $7,500 $500
Maximum employee elective deferral (for ages 50-59 and 64 or older) $32,500 $31,000 $1,500
Employee catch-up contributions (for ages 60-63) $11,250 $11,250 $0
Maximum employee elective deferral (for ages 60-63) $35,750 $34,750$1,000
Maximum employer + employee limit (for ages 49 or younger) $72,000$70,000$2,000
Maximum employer + employee limit (for ages 50-59 and 64 or older) $80,000 $77,500 $2,500
Maximum employer + employee limit (for ages 60-63) $83,250 $81,250$2,000
Catch-up as Roth for Highly Paid Income (FICA) Limit $150,000 $145,000$500
Maximum employee compensation limit $360,000 $350,000 $10,000
Highly Compensated Employee Compensation Limitation $160,000 $160,000 $0

Why This Matters

These changes give employees more room to save for retirement. However, the Roth catch-up requirement for highly paid individuals (those with FICA wages over $150,000) could impact tax planning and payroll processes.

Employer Next Steps

To prepare for the 2026 plan year:

  • Update plan materials and employee communications to reflect new limits and Roth catch-up rules.
  • Verify payroll settings: Most providers update limits automatically, but employers are responsible for compliance.
  • Plan for Roth catch-up contributions: Highly paid employees must make catch-up contributions as Roth starting in 2026.
  • Monitor nondiscrimination testing: Ensure contributions align with IRS limits.

Source: IRS Notice 2025-67 – https://www.irs.gov/pub/irs-drop/n-25-67.pdf

Advisory services offered by World Investment Advisors, LLC. Securities offered by World Investments, LLC, member FINRA/SIPC. World Investment Advisors, LLC is affiliated through common ownership with World Investments, LLC.

Kevin Takinen — Kevin is a Manager of Financial Services with Sequoia Consulting Group where he works closely with clients to evaluate and recommend retirement plan changes specific to each client’s needs. This includes optimizing plan design, providing investment due diligence, benchmarking, and fiduciary guidance. He’s been in the retirement & financial services industry for over 15 years. Outside of work, Kevin enjoys biking with his family, building Lego with his son, and reading a good book.