2026 Retirement Plan Limits Announced:

On November 13, via Notice 2025-67, the IRS announced the effect of cost-of-living adjustments on certain 2026 dollar limits for various retirement plans (e.g., 401(k), 403(b), and 457(b) plans). Several limits will increase for 2026 because of inflation, as the increase in the cost-of-living index met statutory thresholds that triggered their adjustment for 2026. Here are the most notable figures for defined contribution plans:

• Elective Deferrals: The elective deferral contribution limit will increase from $23,500 to $24,500, not including catch-up contributions. See Internal RevenueCode (“Code”) sections 402(g) and 457(e)(15).
• Basic Catch-Up Contributions: This limit for participants who will be at least 50 years of age at any point during 2026 will increase from $7,500 to $8,000. SeeCode section 414(v).
• Enhanced Catch-Up Contributions:  The limit for catch-up contributions by a participant who attains age 60, 61, 62, or 63 in 2026 will remain at $11,250.  This is a  permissible provision that became available as of January 1, 2025 under the SECURE 2.0 Act of 2022 (“SECURE 2.0”).  See Code section 414(v)(2)(E)(i).
• Roth Catch-Up Contributions:  The wage threshold for 2025, which is used to determine whether a participant’s catch-up contributions for 2026 must be Roth contributions, will increase from $145,000 to $150,000.  See Code section 414(v)(7)(A).
• Compensation: The annual limit on compensation that can be considered for purposes of contributions and deductions will increase from $350,000 to $360,000. SeeCode section 401(a)(17), which relates to contributions, and Code section 404(l), relating to deductions.
• Highly Compensated Employees: The compensation threshold for determining who is a highly compensated employee will remain at $160,000. (Note that a participant’s ownership of the plan sponsor and/or any related organization(s), as well as certain interests owned by a participant’s family, can also affect this determination.) SeeCode section 414(q).
• Annual Additions: The limit on the combination of participant contributions, employer contributions, and forfeiture allocations credited to a participant’s account will increase from $70,000 to $72,000. SeeCode section 415(c).
• Key Employees: The compensation amount for determining which officers are key employees, which is important for top-heavy plan purposes, will increase from $230,000 to $235,000. SeeCode section 416(i).

Individuals who administer retirement plans (e.g., Human Resources, Payroll, service providers) should start planning to implement the 2026 limits. This may involve steps such as drafting communications to employees, revising plan administration forms and manuals, and revising payroll systems.