IRS Releases 2026 Retirement Plan Limits, What Employers and Employees Need to Know

The IRS has officially released Notice 2025-67, outlining the 2026 cost-of-living adjustments for qualified retirement plans, including 401(k)s, IRAs, SIMPLE plans, and defined contribution plans. These annual updates impact how much employees can save for retirement and what employers must consider when updating plan documents, payroll systems, and employee communications.

At Relation, we help employers stay ahead of regulatory changes that affect their workforce and benefits strategy. Below is a clear breakdown of the key 2026 updates and what they mean for your organization.

Key Contribution Limit Changes for 2026

401(k) and Similar Plans

• Employee contribution limit: $24,500 (up from $23,500 in 2025)
• Catch-up contribution (age 50+): $8,000 (up from $7,500)
• Special catch-up limit (ages 60–63 under SECURE 2.0): $11,250, which remains unchanged from 2025

These increases allow employees to save more tax advantaged dollars in the years leading up to retirement.

IRA Limits

• Traditional and Roth IRA contribution limit: $7,500 (up from $7,000)
• Catch-up contribution (age 50+): $1,100 (up from $1,000)

The catch-up adjustment now grows annually because of changes introduced under SECURE 2.0, which gives older savers more flexibility.

SIMPLE IRA and SIMPLE 401(k) Plans

• Standard contribution limit: $17,000 (up from $16,500)
• Enhanced limit for qualifying SIMPLE plans (under SECURE 2.0): $18,100 (up from $17,600)

These increases help small businesses offer more competitive retirement benefits.

Updates to Key Definitions and Plan Limits

• Highly Compensated Employee (HCE): Remains $160,000
• Key Employee (for top heavy testing): Increased to $235,000 (up from $230,000)
• Defined Contribution Annual Limit (415(c)): $72,000 (up from $70,000)
• Annual Compensation Limit: $360,000 (up from $350,000)

These thresholds shape plan testing, employer match calculations, and compliance requirements.

What This Means for Employers

Now is the ideal time to review:

• Employee communications and open enrollment materials
• Payroll and HRIS contribution settings
• Plan documents and compliance considerations
• Strategies for supporting high earners and late career employees

If you have questions about how the 2026 retirement plan limits may affect your organization, our Relation advisors are here to help. Click here to locate a Relation Employee Benefits Broker.