The IRS set the contribution limit to the retirement plans to ensure workers do not misuse the tax advantages and save for retirement. The contribution limit is adjusted based on inflation. The announcement for the IRA limits for 2026 has not been announced yet; let’s see what you can expect next year.
The IRS generally announces the contribution limit for retirement plans by the end of October or early November 2025, but the announcement is not public yet. The workers who contribute to the retirement plans should know about the limits to prevent penalties and other consequences.
Based on the cost of living and CPI, the IRS defines the limits for the year. Many analysts and platforms have forecasted the IRS limits for 2026 based on the CPI and COLA. The contribution limit will help you decide how much you can save for retirement and get the tax advantage.
What can be the expected IRS 401(k) and IRA limits for 2026?
The 2026 inflation adjustment was announced on 09 October 2025, and now the employees await the IRS limits announcement. The platforms and analysts have predicted the IRS 401(k) and IRA limits for 2026 based on the past trend and current inflation.
- The 401(k) retirement plans allow the individual to contribute up to a certain limit. This limit was raised by $500 last year from $23,000 to $23,500, so for 2026, the platforms expect a $1000 boost, that is $24,500.
- The IRA limits for the traditional and ROTH were $7000 in 2025, and now it is projected to be raised by $500, that is, $7500.
- If you are aged 50 or older, you can unlock the catch-up contributions, where you can save extra. For 2025, it was $7,500 for 401(k), but now it is expected to be increased to $8000.
- The higher catch-up contribution for 401(k) for people aged between 60 – 63 can increase to $11,500 from $11,250.
- The phaseout range for the retirement plan would also be increased for people covered under workplace retirement plans.
How much more can you save for retirement?
American workers saving for their retirement through retirement plans, IRAs, and others can save higher with the increase in the contribution limit. If the agency boosted the limits as per the projected limits, you can expect your savings to be affected in the following ways:
- Workers under age 50 can expect to save $1500 more through the increase in the limit in a year, in comparison to previous limits.
- People who are aged 50+ can save more than $1000 with the expected catch-up contribution raise.
The workers can save more through retirement plans for the future and also get tax benefits, such as tax-free withdrawals, reduced tax bills, and tax-deferred growth.
What are the changes coming in 401K in 2026?
The IRS all ready to implement some changes to the 401(k) rules under the SECURE 2.0 Act, such as:
- The high earners who earn more than $145,000 in the fiscal year have to make catch-up contributions on an after-tax ROTH basis. You will pay taxes on the specific catch-up contributions, but you can withdraw them without any tax.
- If your income is below the limit of $145,000, you can make the pre-tax catch-up contributions just like you used to before, without any restriction on a ROTH basis.
This new change was under the SECURE 2.0 Act, which was initially supposed to be implemented in 2024, but was delayed due to unknown reasons.
What happens in case of overpayment to the retirement plans?
If the worker overcontributes to the retirement plans, then you must withdraw it before the tax deadline; otherwise, it will be taxed. On the excess contributions, you will have to pay 10% tax on the overpaid amount.
If you do not withdraw the excess contribution, it can be taxed twice, once when you contribute and file the tax returns, second when it is distributed. The workers must keep an eye on their retirement plan contributions through payroll records, Form W-2, or through their plan provider.
The IRS will update the 401(k) and IRA limits for 2025 on the COLA adjustment page, or you can stay tuned to find the raised IRS limits as soon as the announcement is made. The IRS can make the announcement anytime soon, as they are behind the general timeline.
Disclaimer: IRS 401(k) and IRA 2026 limit updates are for informational purposes only. Verify official contribution limits with the IRS.
