Updated 2026 Limits for Employer-Sponsored Qualified Retirement Plans

For employers that sponsor qualified retirement plans, it’s essential to stay on top of annual IRS inflation adjustments to contribution limits and other amounts. These changes affect everything from plan design to employee communication to payroll processes. For 2026, many commonly used qualified plans will see updates that you’ll need to incorporate into administration and planning. Here are some highlights:

Elective deferrals to defined contribution plans. The annual limit on elective deferrals to 401(k), 403(b) and 457 plans will increase to $24,500 (up from $23,500). Meanwhile, the annual limit for Savings Incentive Match Plan for Employees (SIMPLE) IRAs will rise to $17,000 (up from $16,500). The limit on total contributions to defined contribution plans will increase to $72,000 (up from $70,000).

Catch-up contributions to defined contribution plans. The annual limit on catch-up contributions to 401(k), 403(b) and 457 plans, which are available to participants age 50 or over, will generally rise to $8,000 (up from $7,500). However, under the SECURE 2.0 Act, a higher catch-up contribution limit of $11,250 (unchanged from 2025) applies to participants who are 60, 61, 62 or 63 in 2026.

Starting next year, SECURE 2.0 also requires that catch-up contributions of higher-income taxpayers be treated as post-tax Roth contributions rather than pretax salary deferrals. Generally, for 2026, the requirement will apply to taxpayers who earned more than $150,000 in the previous year. However, new final regulations state that the deadline for plan amendments to implement this change is December 31, 2026.

The annual catch-up contribution limit for SIMPLE IRAs will increase to $4,000 (up from $3,500). However, under SECURE 2.0, a higher catch-up contribution limit of $5,250 (unchanged from 2025) will apply to SIMPLE IRA owners who are 60, 61, 62 or 63 in 2026.

Annual limit for defined benefit plans. Commonly known as pensions, these plans may not promise an annual benefit that exceeds the lesser of 100% of a participant’s average compensation for the individual’s highest three consecutive years or a dollar limit set annually by the IRS. That dollar limit will rise to $290,000 (up from $280,000).

Contribution and participation limits for Simplified Employee Pension Individual Retirement Accounts (SEP-IRAs). The annual limit for SEP-IRAs will be 25% of an employee’s total compensation, up to $72,000 (increased from $70,000). Catch-up contributions aren’t allowed for these accounts. The threshold for determining participation in a SEP-IRA will increase to $800 (up from $750).

Compensation for qualified retirement plan purposes. The annual limit on the maximum compensation that can be taken into account for certain retirement plan contributions and deductions will rise to $360,000 (up from $350,000).

Highly compensated employees. The threshold for determining who’s a highly compensated employee will remain at $160,000.

Key employees. The threshold for defining who’s a key employee under the top-heavy rules will rise to $235,000 (up from $230,000).

The retirement savings contributions credit. The adjusted gross income limit for determining whether certain individuals are eligible for this tax credit, which is also known as the saver’s credit, will increase to:

• $80,500 (up from $79,000) for married taxpayers filing jointly,
• $60,375 (up from $59,250) for heads of household, and
• $40,250 (up from $39,500) for all other taxpayers.

“Control” employees. The amounts used to determine who’s a control employee, a classification relevant to valuing employer-sponsored fringe benefits, will increase to $145,000 (up from $140,000) for officers and $290,000 (up from $285,000) for other employees.

Social Security taxable wage base. The annual cost-of-living adjustment to the maximum amount of earnings subject to Social Security tax, which is relevant for various benefit purposes, will increase to $184,500 (up from $176,100).

As 2026 approaches, these IRS-issued inflation adjustments give employers a chance to revisit their retirement plan strategies, update payroll and administrative systems, and communicate new savings opportunities to employees. Contact us for help interpreting the new limits and other amounts, reviewing qualified plan documents, and assessing how these changes could affect your workforce.

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