Every year, business owners and employees look forward to updated guidance from the Internal Revenue Service (IRS) on the contribution limits for retirement plans. In this article, we’ll break down the yearly IRS contribution limits and explain why these numbers matter for your team’s long-term financial security.
At Paper Trails, our mission is to keep employers and HR professionals informed about important payroll and HR developments. By the end of this article, you’ll understand the key changes coming this year so you can help employees maximize their retirement savings—and ensure your business stays compliant. Let’s dive in.
What Are IRS Contribution Limits?
Contribution limits represent the maximum amount an individual can save in certain retirement accounts each year. Set by the IRS, these limits apply to plans such as Individual Retirement Accounts (IRAs), 401(k)s, and Savings Incentive Match Plans for Employees (SIMPLE IRAs). These annual caps help maintain fairness in the tax system while ensuring that tax-advantaged retirement savings remain accessible across the workforce.
Why Do These Contribution Limits Change Each Year?
The IRS typically adjusts contribution limits to reflect inflation and rising costs of living. These increases help workers maintain their purchasing power and stay on track with retirement goals as expenses and life expectancies grow. Over the past few years, these adjustments have become more noticeable—and the changes this year continue to follow that pattern.
What Are the 2026 IRS Contribution Limits?
Let’s break down the 2026 IRS contribution limits across various retirement accounts.
2026 Contribution Limits Overview
| Age Range | 401(k), 403(b), & 457(b) | SIMPLE IRA (<25 EE) | SIMPLE IRA (26-100 EE) |
| <50 years old | $24,500 | $18,100 | $17,000 |
| 50-59 years old | $32,500 ($8,000 catch-up) | $22,100 ($4,000 catch-up) | $21,000 ($4,000 catch-up) |
| 60-63 years old | $35,750 ($11,250 catch-up) | $23,350 ($5,250 catch-up) | $22,250 ($5,250 catch-up) |
| 64+ years old | $32,500 ($8,000 catch-up) | $22,100 ($4,000 catch-up) | $21,000 ($4,000 catch-up) |
Secure Act 2.0 Changes
SECURE Act 2.0 brings several meaningful updates for 2026 that employers should understand. From age-based catch-up limits to new SIMPLE IRA rules and Roth requirements for higher-income earners, these changes could impact how your team saves—and how you stay compliant.
2026 SIMPLE IRA and 401(k) Catch-Up Limits
SECURE Act 2.0 introduced new catch-up contribution rules for 401(k) and SIMPLE IRA plans. These catch-up limits now vary based on the age an individual will turn during that calendar year. For example, if an employee turns 60 in 2026, they qualify for the special catch-up limits for ages 60–63. However, if they turn 64 in 2026, they no longer fall within that 60–63 age range and therefore are not eligible for those enhanced limits.
| Age Range | 401(k), 403(b), & 457(b) Catch-Up Amount | SIMPLE IRA (<25 EE) Catch-Up Amount | SIMPLE IRA (26-100 EE) Catch-Up Amount |
| 50-59 years old | $8,000 catch-up | $4,000 catch-up | $4,000 catch-up |
| 60-63 years old | $11,250 catch-up | $5,250 catch-up | $5,250 catch-up |
| 64+ years old | $8,000 catch-up | $4,000 catch-up | $4,000 catch-up |
401(k), 403(b), & 457(b) Contributions
Beginning in 2026, any catch-up contributions (the higher contribution limits for those over 50 years old) to a 401(k), 403(b), or 457(b) for high earners ($145,000 in taxable Social Security wages in the prior calendar year) must be made as Roth (post-tax) contributions.
SIMPLE IRA Limits
SIMPLE IRA plans have two different contribution limits in 2026, depending on employer size. Businesses with 25 or fewer employees have higher SIMPLE IRA contribution limits. For 2026, this employee contribution limit is $18,100, up from $17,600 in 2025. Employers with more than 25 employees (26–100) have a SIMPLE IRA contribution limit of $17,000 for 2026.
2026 Traditional and Roth IRA Contribution Limits
In 2026, both Traditional and Roth IRA savers can look forward to an increase in their contribution capabilities. The annual contribution limit for an IRA is $7,500. For individuals aged 50 and over, the catch-up contribution—now tied to an annual cost-of-living adjustment under SECURE 2.0—also increases, rising to $1,100 (up from $1,000 in 2025). This allows older savers to contribute up to $8,600 total in 2026.
These updated limits strengthen retirement readiness for workers at every stage of their careers. For employees who may be behind on savings, the expanded catch-up opportunities provide a meaningful boost.
Phase-Out Ranges for IRA Deductibility
Each year, the IRS updates the income phase-out ranges that determine whether individuals can deduct Traditional IRA contributions. For 2026, these ranges have increased again, giving more taxpayers the ability to reduce taxable income through IRA savings.
Traditional IRA Phase-Out Ranges in 2026
-
Single taxpayers covered by a workplace retirement plan:
$81,000 to $91,000 (up from $79,000 to $89,000 in 2025) -
Married couples filing jointly (spouse making the contribution is covered):
$129,000 to $149,000 (up from $126,000 to $146,000 in 2025) -
IRA contributor not covered by a workplace plan, married to someone who is covered:
$242,000 to $252,000 (up from $236,000 to $246,000 in 2025) -
Married individuals filing separately (covered by a retirement plan):
Phase-out remains $0 to $10,000 (not subject to cost of living adjustments)
These expanded income thresholds allow more workers—especially dual-income households—to benefit from tax-deductible retirement contributions.
Roth IRA Phase-Out Ranges for 2026
The IRS also increased the income ranges that determine Roth IRA eligibility:
-
Single taxpayers and heads of household:
$153,000 to $168,000 (up from $150,000 to $165,000 in 2025) -
Married couples filing jointly:
$242,000 to $252,000 (up from $236,000 to $246,000 in 2025) -
Married individuals filing separately:
Phase-out remains $0 to $10,000 (unchanged)
These increases expand Roth IRA access to more earners—particularly beneficial for employees seeking long-term, tax-free retirement growth.
IRS Contribution Limit FAQs
How do I know which limits apply to me or my employees?
Catch-up contributions are now age-banded under SECURE Act 2.0, meaning the limit depends on the age an individual will turn during the calendar year, not their age on January 1. Employees under the age of 50 have no catch-up opportunities. Those turning 50–59 qualify for the standard catch-up amount. Those turning 60, 61, 62, or 63 qualify for the higher, enhanced catch-up limit. Anyone turning 64 or older reverts to the standard catch-up tier.
This rule is important for payroll setup, plan administration, and employee communication—especially for workers whose birthdays fall late in the year.
What is the difference in SIMPLE IRA limits for employers with less than 25 employees and those with more than 25 employees?
There are two tiers for SIMPLE IRAs in 2026. Employers with 25 or fewer employees have a higher employee contribution limit of $18,100. Employers with 26–100 employees follow the employee limit of $17,000.
What is the new requirement for higher earners with 401(k) catch-up contributions?
Starting in 2026, employees who earned $145,000 or more in Social Security wages in the prior year must make all catch-up contributions (the additional amounts allowed for workers age 50+) on a Roth basis.
This means the contributions are made post-tax, grow tax-free, and can be withdrawn tax-free in retirement—similar to a Roth IRA. Employers should ensure their payroll systems and retirement plans are set up to process Roth catch-up contributions correctly and communicate this change proactively to higher-earning staff.
How Do Roth IRA Phase-Out Ranges Affect Contribution Eligibility?
Roth IRAs have income limits that determine who can contribute. As income enters the phase-out range, the maximum allowable contribution is reduced; once income exceeds the top of the range, direct Roth contributions are no longer allowed. In 2026, these ranges increased again, allowing more individuals—especially dual-income families—to contribute directly to a Roth IRA.
How can employees maximize their retirement contributions in 2026?
Employees can take full advantage of the increased limits by reviewing their contribution elections during open enrollment or at the start of the year. Those who are eligible for catch-up contributions—especially employees turning ages 60–63—may benefit significantly from the enhanced catch-up limits.
Workers should also consider whether a traditional or Roth approach makes sense based on their income, tax bracket, and long-term goals. Employers can support this by providing educational resources, sharing IRS updates, and encouraging regular financial planning conversations.
Conclusion
Staying up to date on yearly IRS contribution limits is essential for both employers and employees. These changes impact how your team saves, how your payroll is processed, and how your business remains compliant with evolving federal requirements. By understanding the yearly updates, you can better support your employees’ financial well-being and help them make informed retirement decisions.
If you have questions about implementing these changes or need help updating your payroll settings, the Paper Trails team is always here to help.
Written November 2025
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