Retirement Plan Contribution Limits 2026: 401(k), 403(b), and IRA
6/12/2026
Contribution limits are the one part of retirement plan administration payroll cannot delegate. Every limit has to be loaded into the system before the first payroll of the year, monitored during it, and reconciled after — and several of the 2026 rules interact in ways that a single deduction-limit field cannot represent.
The 2026 Limits
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Limit
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2026
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2025
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Elective deferral — 401(k), 403(b), most 457(b)
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$24,500
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$23,500
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Catch-up contribution, age 50+
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$8,000
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$7,500
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Catch-up contribution, ages 60–63
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$11,250
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$11,250
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IRA contribution
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$7,500
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$7,000
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Roth catch-up requirement — prior-year wage threshold
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$150,000
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$145,000
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Additional figures payroll should confirm with the plan administrator each year because they drive testing and allocation rather than deductions: the overall annual additions limit, the annual compensation limit, the highly compensated employee threshold, the key employee threshold for top-heavy testing, and the SIMPLE plan limits.
Our retirement plan administration page and 401(k) Training & Certification Program cover the plan-side rules.
Two Rules That Break a Single Limit Field
The Ages 60–63 Catch-Up
Participants aged 60 through 63 may contribute a higher catch-up amount — $11,250 — in place of the standard $8,000, if the plan permits it.
Three configuration consequences:
- The catch-up limit is not uniform across participants age 50+. It depends on the participant's age during the year.
- The higher amount is plan-optional. Payroll must know whether this plan adopted it, and cannot assume.
- Eligibility ends after age 63. A participant who was eligible for $11,250 at 63 reverts to $8,000 at 64, which means the limit changes year over year for the same person in a way that is easy to miss.
The Roth Catch-Up Requirement
Participants whose prior-year wages exceeded the applicable threshold must make catch-up contributions on a Roth basis. This is mandatory for them, not an election.
This is the rule most likely to produce an operational failure, because it requires three systems to agree:
- Payroll must identify who is above the prior-year wage threshold and route their catch-up to a Roth deduction code
- The plan document must permit Roth contributions at all — a plan without a Roth feature has a genuine problem here
- The recordkeeper must expect the contribution on the basis payroll actually sent it
A mismatch — payroll taking a pre-tax catch-up for a participant required to use Roth — is an operational failure requiring correction. And because the determination rests on prior-year wages, it must be recalculated each January based on the year just closed, not on current-year pay.
Note the practical wrinkle: an employee hired mid-year has no prior-year wages with you, which is a determination question worth resolving with the plan administrator rather than defaulting.
The FICA Rule Limits Do Not Change
Worth restating alongside the limits, because it is the most consequential taxation fact and it is unaffected by any limit:
A traditional deferral reduces federal income tax wages only. Social Security, Medicare, FUTA, and state unemployment wages are unchanged. A participant deferring the full $24,500 has $24,500 less in Box 1 of their Form W-2 and no reduction in Boxes 3 and 5.
Roth deferrals reduce nothing. They are after-tax for every purpose.
Employer contributions are not wages to the employee and appear in no W-2 wage box.
A system configured with one "pre-tax" flag applied across all bases under-withholds FICA all year for every participant. See our pre-tax vs. post-tax deductions guide.
Limits That Apply Per Person, Not Per Plan
The elective deferral limit is an individual limit, aggregated across all plans in which the person participates during the year — not a per-employer limit.
This creates a monitoring gap employers cannot close alone:
- An employee who changes jobs mid-year may defer modestly with you and heavily with their prior employer, exceeding the individual limit in total
- The employer cannot see the prior employer's deferrals, and is generally not responsible for policing the aggregate
- The employee is responsible for identifying an excess and requesting a corrective distribution, generally by the tax filing deadline
- If not corrected, the excess is taxable and can be taxed again on distribution
What payroll can do: monitor its own plan's limit rigorously, and communicate to mid-year hires that deferrals with a prior employer count toward the same annual limit. A short note in onboarding materials prevents most of these.
Certain 403(b) and 457(b) arrangements have their own special catch-up provisions and coordination rules, which are plan-specific and worth confirming rather than assuming.
What Happens When a Limit Is Exceeded
Excess deferrals in your plan. Generally corrected by distributing the excess plus earnings to the participant by the applicable deadline. Missing the deadline increases the tax consequences and can create a plan qualification issue.
Exceeding the annual additions limit, counting employee deferrals, employer contributions, and forfeitures allocated, requires correction under the plan's correction procedures.
A missed catch-up basis — pre-tax where Roth was required — is an operational failure with its own correction path.
In every case the correction runs through the plan administrator. Payroll's job is to surface the problem early enough that a correction deadline can be met.
The January Load Is a Project, Not a Task
Loading new limits looks like updating a few fields. In practice it is the single most error-prone annual event in retirement plan payroll administration, and it deserves a checklist rather than a memory.
What has to change, and why each one gets missed:
The deferral limit. Straightforward, and usually done correctly — this is the field everyone remembers.
The catch-up limit, by age band. Requires the system to apply different limits to different participants based on age, and to move participants between bands as they age. A system with a single catch-up field cannot represent the ages 60–63 provision at all, which means either a workaround or a manual monitoring process.
The Roth catch-up population. Must be recalculated from the prior year's wages, which are only final after year-end processing closes. This means the determination happens in the narrow window between closing the prior year and running the first payroll of the new one — the busiest period in the payroll calendar. Employers who defer it "until things calm down" have already run payrolls on the wrong basis.
The compensation limit used for match calculations, which caps the compensation on which employer contributions are computed.
The highly compensated and key employee thresholds, which affect testing rather than deductions but are frequently loaded in the same pass.
Stop-at-limit logic. Confirm the system actually halts deferrals at the ceiling rather than continuing past it. This is worth testing rather than assuming, particularly after any system upgrade.
Employer match formulas where the match is tied to a limit or a percentage of a capped compensation figure.
Two practical recommendations. First, verify the load with a test calculation rather than only checking the field values — run a participant at the limit and confirm the deferral stops where it should. Second, document who loaded what and when. When a limit error surfaces in October, the first question is when the field was set, and the answer should not require reconstruction.
Payroll's Annual Limit Checklist
- [ ] Load the elective deferral limit of $24,500 before the first payroll of the year
- [ ] Load the age 50+ catch-up of $8,000
- [ ] Confirm whether the plan adopted the ages 60–63 catch-up of $11,250, and configure it by participant age
- [ ] Confirm participants who age out of the 60–63 band revert to $8,000
- [ ] Identify participants above the prior-year wage threshold and route their catch-up to a Roth code
- [ ] Confirm the plan document permits Roth contributions if the Roth catch-up rule applies to anyone
- [ ] Confirm the recordkeeper's expectations match the basis payroll is sending
- [ ] Verify traditional deferrals reduce FIT wages only
- [ ] Confirm the plan's compensation definition is mapped to the correct earnings codes
- [ ] Communicate to mid-year hires that the deferral limit aggregates across employers
- [ ] Monitor participants approaching the limit and stop deferrals at the ceiling
- [ ] Reconcile total deferrals per payroll to the recordkeeper quarterly
- [ ] Request compliance testing results early enough to correct a failure within the deadline
The quarterly reconciliation is the highest-value item. It catches limit configuration errors, catch-up basis mismatches, and compensation definition problems while correction is still inexpensive.
Communicating the Limits to Employees
Limits generate a predictable set of employee questions each January, and answering them well reduces both confusion and the volume of follow-ups.
"Why did my 401(k) deduction stop?" Because the participant reached the annual deferral limit. Confirm the year-to-date total, explain that the limit is annual and per person, and note that the deduction resumes in January. Participants who front-load deferrals early in the year and then lose their employer match on later payrolls are frequently surprised — whether the match is affected depends on whether the plan trues up the match annually, which is a plan-design question worth knowing the answer to before being asked.
"Can I contribute more than the limit?" Not as an elective deferral. Some plans permit after-tax contributions beyond the elective deferral limit, subject to the overall annual additions limit and to testing. Whether your plan does is a plan-document question, not a payroll one.
"Why is my catch-up going into Roth when I elected pre-tax?" Because the participant's prior-year wages exceeded the threshold, and Roth treatment is mandatory rather than elective for them. This is the question most likely to arrive as a complaint, and it helps to explain it before the first affected paycheck rather than after.
"I turned 50 this year — when can I start the catch-up?" Generally for the full year in which the participant attains age 50, not from the birthday. Confirm the plan's approach.
"My W-2 Box 1 is lower than Box 3. Is that wrong?" No. Traditional deferrals reduce income tax wages but not Social Security and Medicare wages. This is the single most common January question, and having a one-paragraph written answer ready saves considerable time.
"I contributed at my old job too." The limit aggregates across employers, and the employee is responsible for identifying and correcting an excess. Flag this proactively for mid-year hires rather than waiting for it to become a correction.
Frequently Asked Questions
What is the 401(k) contribution limit for 2026?
$24,500 for elective deferrals to a 401(k), 403(b), or most 457(b) plans, up from $23,500 in 2025. The catch-up contribution for participants age 50 and older is $8,000, participants aged 60 to 63 may contribute $11,250 instead if the plan permits, and the IRA limit is $7,500.
What is the 401(k) catch-up contribution for 2026?
$8,000 for participants age 50 and older. Participants aged 60 through 63 may contribute $11,250 in place of that amount, but only if the plan has adopted the provision — it is optional. Eligibility for the higher amount ends after age 63, so a participant reverts to $8,000 at 64, which changes their limit year over year.
Who must make Roth catch-up contributions?
Participants whose prior-year wages exceeded the applicable threshold — $150,000 for determining 2026 treatment. For them, catch-up contributions must be made on a Roth basis rather than pre-tax, and it is not an election. The determination must be recalculated each January based on the year just closed, and it requires the payroll deduction code, the plan document's Roth feature, and the recordkeeper's expectation to all agree.
Is the 401(k) limit per employer or per person?
Per person. The elective deferral limit aggregates across all plans in which the individual participates during the year, so someone who changes jobs mid-year can exceed the limit in total even though neither employer's plan was exceeded. The employer cannot see the prior employer's deferrals and is generally not responsible for policing the aggregate — the employee must identify an excess and request a corrective distribution.
Do 401(k) contributions reduce Social Security wages?
No. A traditional deferral reduces federal income tax wages only, leaving Social Security, Medicare, FUTA, and state unemployment wages unchanged — which is why Box 1 of Form W-2 is legitimately lower than Boxes 3 and 5. Roth deferrals reduce no tax base at all, and employer contributions are not wages to the employee and appear in no wage box.
What happens if an employee exceeds the deferral limit?
The excess is generally corrected by distributing it plus earnings to the participant by the applicable deadline. Missing that deadline increases the tax consequences — the excess can effectively be taxed twice — and may create a plan qualification issue. Corrections run through the plan administrator, so payroll's role is to surface the excess early enough that the deadline can be met.
Going Deeper
Contribution limits are adjusted annually and recent legislation has added rules that interact with plan design. Confirm current-year figures against the IRS announcement and verify the plan's own provisions — particularly on the ages 60–63 catch-up and the Roth catch-up requirement — before configuring payroll.
