Are you ready to save more for retirement in the coming year? Good news – the IRS just announced higher contribution limits for 401(k) plans and Individual Retirement Accounts (IRAs) in 2026. These increases mean you can shelter more of your income in tax-advantaged accounts, giving your future nest egg a welcome boost. Let’s break down exactly what’s changing and how you can make the most of these new limits.
2026 Contribution Limit Highlights
- 401(k), 403(b), 457, and Thrift Savings Plan (TSP): You can contribute up to $24,500 in 2026 (a $1,000 increase from the $23,500 limit in 2025) irs.govirs.gov.
- Catch-Up for 401(k)/403(b)/457 (Age 50+): If you’re 50 or older, you can put in an extra $8,000 (up from $7,500). That brings the total 401(k) contribution for those 50+ to $32,500 in 2026. Those aged 60–63 have an even higher catch-up limit of $11,250 under a special rule, allowing a potential $35,750 total contribution.
- IRA (Traditional or Roth): You can contribute up to $7,500 to an IRA in 2026 (a $500 increase from the $7,000 limit in 2025 ) irs.gov.
- Catch-Up for IRA (Age 50+): If you’re 50 or older, the IRA catch-up contribution is now $1,100 (up from the long-standing $1,000). This means older savers can put away $8,600 per year in an IRA (combined traditional and Roth) starting in 2026.
These figures reflect cost-of-living adjustments that the IRS makes annually to keep up with inflation, cbsnews.com. Without these periodic increases, savers would effectively be able to put away less in real terms each year, making it harder to build a sufficient retirement fund. The higher limits in 2026 are designed to help your savings keep pace with the rising cost of living.
Higher 401(k) Limits Mean More Tax-Deferred Savings
If you participate in a 401(k), 403(b), 457 plan, or the federal TSP, you’ll be able to contribute up to $24,500 from your salary in 2026. That’s $1,000 more than the current $23,500 limit in 2025, giving you extra room to grow your retirement savings tax-deferred. What does an extra $1,000 mean? Over time, that additional contribution could compound into thousands more in your account due to investment growth – essentially a bigger cushion for your future.
Catch-up contributions for those aged 50 and above are also increasing. In 2026, workers 50+ can contribute an additional $8,000 into their 401(k)-type plans, up from $7,500 this year. This change brings the maximum total 401(k) contribution for older workers to $32,500 (if you’re 50 or older) starting in 2026, irs.gov. If you happen to be in the 60–63 age bracket, there’s a special catch-up provision (established by the SECURE 2.0 Act) that lets you contribute even more – up to $11,250 in catch-up for those years. That means someone aged 60–63 could potentially sock away $35,750 in their 401(k) in 2026, combining regular and catch-up contributions. This is a significant opportunity for late-career individuals to accelerate their savings as retirement draws closer.
Expert Insight: “The new 2026 retirement plan limits give people more room to save, which is especially helpful as retirement gets longer and more expensive,” notes Lisa Featherngill, a wealth management director. “Higher limits for 401(k), 457 and similar plans — along with bigger catch-up contributions — make it easier for workers to put away more money each year,”cbsnews.com. In other words, these higher limits can help you boost your savings at a time when many Americans worry about having enough for a comfortable retirement.
Even if you can’t afford to contribute the maximum, consider increasing your contribution rate slightly in 2026 to take advantage of the higher limit. For example, if you get a raise or a year-end bonus, directing a portion of it to your 401(k) could help you inch closer to the new cap. At the very least, aim to contribute enough to capture your employer’s full matching contribution (if offered) – that’s essentially free money toward your retirement. With the new $24,500 limit, you have more headroom to save, so think of it as the IRS giving you a bigger tax-advantaged bucket to fill at your own pace.
IRA Contribution Limit Jumps to $7,500 (and $8,600 for Ages 50+)
IRAs are also getting a boost. In 2026, the annual contribution limit for Traditional and Roth IRAs will increase to $7,500, up from the current $7,000. This $500 hike is great news for those using IRAs to save for retirement, as it’s the second year in a row the limit has gone up (reflecting recent inflation adjustments). If you’re under age 50, you’ll be able to contribute the full $7,500 across all your IRAs (combined) next year, which can be split between a Traditional and Roth IRA if you choose.
For savers age 50 or older, there’s more good news: the additional catch-up contribution for IRAs is now indexed to inflation. It had long been fixed at $1,000, but starting in 2026, it will rise to $1,100. This change, a result of the SECURE 2.0 law, means the catch-up amount can gradually increase over time. In 2026, an individual over 50 can contribute up to $8,600 total to their IRA(s) for the year (the $7,500 base limit plus the $1,100 catch-up), irs.gov. Every extra dollar helps – that additional $100 catch-up may seem small, but it too can grow over the years of compounding (and we can expect it to continue creeping upward in future years with inflation).
Roth IRA income limits have also edged up, potentially allowing some people to qualify for a Roth who previously earned just above the cutoff. For example, single filers can have a modified adjusted gross income up to around $168,000 in 2026 and still contribute to a Roth IRA (the phase-out range for singles is $153,000 to $168,000, up from $150k–$165k this year). Similarly, the income phase-out ranges for deducting contributions to a Traditional IRA if you’re covered by a workplace plan have increased by a couple of thousand dollars compared to 2025. In short, slightly more people will be eligible for IRA tax benefits in 2026 due to these adjusted income thresholds, irs.gov.
Pro tip: To take full advantage of the higher IRA limit, consider setting up automatic monthly contributions. For instance, $7,500 per year works out to about $625 a month. Automating deposits can make it easier to hit the max without a last-minute scramble next April. And if you’re 50+, remember to add that extra $100 at some point during the year – or roughly $8 extra per month – to reach the new $8,600 total allowed.
Why the IRS Raises Limits: Inflation and Your Retirement
You might be wondering why these limits are increasing. The answer lies in inflation and the law. By law, many tax-related limits – including retirement account contributions – are subject to annual cost-of-living adjustments (COLAs). The IRS reviews inflation data each year and bumps up the contribution limits when warranted, so that the real value of what you can save in a tax-advantaged account doesn’t erode over time, cbsnews.com. In practical terms, this means the government is acknowledging that as prices and wages rise, so should the amount you’re allowed to squirrel away for the future. Without these COLA increases, staying within the old limits would effectively force savers to set aside a smaller share of their income in retirement accounts each year, making it “harder time shelter income from taxes and inflation” over the long run, cbsnews.com.
2025 saw relatively high inflation adjustments, and 2026 continues that trend, albeit at a moderate pace. The boost in the 401(k) limit by $1,000 and the IRA by $500 ensures that diligent savers maintain their purchasing power in retirement. It’s a reminder that inflation doesn’t just impact your grocery bill – it also impacts how much you need to save for the future. The IRS’s adjustments are there to help you keep up.
It’s also worth noting that the Saver’s Credit income limits were adjusted upward for 2026, meaning more moderate-income workers might qualify for this retirement savings credit. For instance, married couples filing jointly can earn up to $80,500 in 2026 and still potentially get a Saver’s Credit for contributing to retirement accounts (slightly up from $79,000 this year). This kind of change can encourage those with lower incomes to save by offering a bit more tax incentive.
(And for small business owners or employees in SIMPLE IRA plans, those limits increased too – SIMPLE plan contributions go up to $17,000 in 2026, with a $4,000 catch-up for 50+ irs.gov.)
How to Take Advantage of the New Limits
A higher contribution limit is like a green light to save more, but it’s up to you to press the gas. Here are some tips to make the most of the 2026 increases:
- Boost Your 401(k) Contribution Rate: As the new year approaches, review how much you’re contributing each paycheck. Could you increase it by a percent or two? Even a small uptick will help you move toward the new $24,500 cap. If your goal is to max out, $24,500 over 12 months is about $2,042 per month (or roughly $942 per biweekly paycheck). Adjust your payroll settings early so your contributions are spread out and you hit the target by year-end.
- Maximize Employer Matching: Make sure you’re contributing at least enough to get your full employer match – that’s free money that can now grow larger with the higher base limit. For example, if your employer matches 5% and you’ve been contributing 5%, consider bumping up to 6% or more. With the higher IRS limits, there’s more headroom to increase your percentage without hitting the ceiling, especially if you get a raise.
- Utilize Catch-Up Contributions if Eligible: Turning 50 in 2026? Congratulations – you qualify to contribute extra to both your 401(k) and IRA. Plan to take advantage of the new $8,000 catch-up limit in your 401(k) or the $1,100 catch-up in your IRA if you can. These catch-up contributions can significantly boost your savings in the critical years leading up to retirement. And if you’ll be 60–63 in 2026 and have the means, note that you have an even larger window ($11,250 extra) to top off your 401(k) – a unique chance to power-charge your savings.
- Consider both 401(k) and IRA: The limits apply to each type of account separately. This means in 2026 you could potentially put $24,500 into your 401(k) and $7,500 into an IRA (subject to income rules), for a total of $32,000 saved, or even more if you’re over 50. If you’ve maxed out your 401(k) at work and still have savings capacity, contributing to an IRA (or Roth IRA) is a great next step.
- Revisit Your Budget and Goals: Use this opportunity as motivation to revisit your retirement goals. Are you on track to fund the retirement lifestyle you want? About 40% of workers worry they aren’t on track to maintain their lifestyle in retirement, cbsnews.com. Increasing your savings toward these new limits can help bridge that gap. Even if you can’t hit the maximum, committing to save a bit more this year – say, increasing your 401(k) contribution by 1-2% of your salary – can make a big difference over time.
Finally, don’t wait to implement these changes. Mark your calendar or log in to your retirement account in early January 2026 to adjust your contribution amounts. The sooner you start, the easier it is to spread out contributions and take full advantage of the limits. If you have questions about how the new limits apply to your situation, consider reaching out to a financial advisor or your HR benefits counselor for guidance.
A Wrap-Up
Planning for retirement can feel daunting, but the IRS’s increased limits for 2026 are a reminder that you have more power than ever to invest in your future. Every dollar you contribute today is an investment in the lifestyle and security you want tomorrow. These higher limits are an opportunity – essentially, the government is handing you a larger tax-advantaged bucket to fill. It’s up to you to fill it. Take this as a motivational nudge to save a little more, whether that means upping your 401(k) contribution, opening an IRA, or simply not cashing out that raise but investing it in yourself.
Remember, time and consistency are on your side. By contributing more in 2026, you’re not just deferring taxes – you’re giving your money extra time to grow and compound. That can mean a big payoff when you’re finally ready to retire. So embrace the new limits, plan your contributions, and keep building that retirement dream. Your future self will thank you for every extra dollar you set aside today.
