The U.S. Internal Revenue Service has released updated 2026 retirement-plan contribution limits for 401(k)s, IRAs, and related tax-advantaged and tax planning vehicles. The increases are driven by inflation adjustments and ongoing implementation of the SECURE 2.0 Act of 2022, which introduced major structural changes to U.S. retirement-savings policy. These updates are relevant for U.S. taxpayers, cross-border professionals, and Canadian residents who earn U.S. employment income or participate in U.S. qualified plans.
Why 401(k) and IRA Limits Are Increasing in 2026
The IRS issues annual cost-of-living adjustments to ensure contribution caps reflect inflation and wage growth. SECURE 2.0 expanded the framework by indexing catch-up contributions and introducing mandatory Roth treatment of certain high-income catch-ups beginning in 2026. These changes directly affect employees, self-employed professionals, business owners sponsoring plans, and individuals planning late-career retirement income strategies.
2026 401(k), 403(b), 457 and TSP Contribution Limits (Inflation-Adjusted)
Category | 2025 Limit | 2026 Limit:
- Employee 401(k) elective deferral (under age 50) | US$23,500 | US$24,500
- Standard catch-up age 50+ | US$7,500 | US$8,000
- Additional catch-up age 60–63 (“super catch-up”) | US$10,000 indexed | US$11,250
- Combined employer/employee annual limit | US$69,000 | Approx. US$72,000
These limits apply across employer-sponsored plan types, including 401(k), 403(b), governmental 457 plans, and the federal Thrift Savings Plan.
2026 IRA Contribution Limits (Traditional and Roth IRAs)
Category | 2025 Limit | 2026 Limit:
- Base IRA contribution under age 50 | US$7,000 | US$7,500
- Age 50+ IRA catch-up | US$1,000 | US$1,100 (indexed for the first time)
2026 Roth IRA Income Eligibility Phase-Out Thresholds
Filing Status | Approx. Phase-Out Range:
- Single / Head of Household | US$153,000 – US$168,000
- Married filing jointly | US$242,000 – US$252,000
These phase-outs determine whether an individual may contribute directly to a Roth IRA.
Mandatory Roth-Only Catch-Up Contributions for High Earners (2026 Rule)
Starting January 1, 2026, employees whose prior-year wages from a single employer exceed US$145,000 (annually indexed) must make all catch-up contributions on a Roth (after-tax) basis. If their employer retirement plan does not allow Roth contributions, the employee cannot make any catch-up contributions at all.
This rule will particularly affect:
- Executives and professionals in finance, legal, medical, and technology fields
- Partners in professional practices
- Late-career earners maximizing final retirement accumulation
- Employees of firms whose plans have not yet added a Roth 401(k) option
Retirement Planning Implications for Entrepreneurs, Investors and Professionals
Maximizing 401(k) Tax-Advantaged Savings
The inflation-adjusted limits allow substantially higher tax-advantaged retirement savings, especially when coordinated across 401(k)s, Roth IRAs, and SEP/Solo plans for self-employed individuals.
SECURE 2.0 and Late-Career Catch-Up Contributions
The age 60–63 super catch-up creates a short but powerful window for accelerated retirement funding, useful for individuals behind on savings or preparing for succession or business exit.
Roth-Only Catch-Up Tax Strategy
The Roth-only requirement will shift planning for many high earners from immediate tax deductions toward long-term tax-free growth and tax-free retirement withdrawals.
Employer Plan Design and Compliance
- Business owners sponsoring retirement plans should ensure:
- Roth 401(k) capability is active before 2026
- Payroll tax systems can properly classify Roth vs. pre-tax catch-ups
- Plan amendments are executed to preserve tax-qualification status
Cross-Border U.S.–Canada Considerations
These limits require coordinated planning for:
- Canadian-resident executives with U.S. compensation
- U.S. retirement accounts held by returning Canadian residents
- RRSP/TFSA integration with U.S. tax-deferred plans
- U.S. pension foreign reporting obligations
Pro Tax Tips for 2026 401(k) and IRA Contributions
- Increase deferral elections at the start of 2026 to maximize compounding.
- For ages 60–63, consider a targeted strategy using the super catch-up window.
- High-income employees should confirm Roth capability with a U.S. tax attorney to avoid losing catch-up room.
- Cross-border taxpayers should evaluate treaty treatment, foreign retirement reporting, and RRSP contribution timing.
FAQs: 2026 Retirement Contribution Limits
Does the US$24,500 limit include the employer match?
No. The limit applies to employee elective deferrals only. The projected total 401(k) limit is approximately US$72,000, including employee and employer contributions.
Does the high-earner Roth rule apply to IRAs?
No. It applies only to employer retirement plans.
Are these limits relevant for Canadians with U.S. retirement plans?
Yes. Coordination with Canadian tax treatment and potential foreign reporting requirements is essential.
Tax Compliance Disclaimer: This article provides general information as of the publication date. It does not constitute legal or tax advice and may become outdated. Tax circumstances vary, and readers should seek guidance from an experienced U.S. or international tax lawyer regarding their specific situation.