Retirement Contribution Changes for 2026 for Employees

With the recent reopening of the federal government, the IRS had recently released it's updated limits for retirement contributions for 2026. Retirement contributions to plans such as a 401(k) are a great way for individuals to not only save for retirement, but to also lower their income tax bill by being able to decrease their taxable income by their contributions.

Being aware of these changes will help those who save for retirement ensure that they are not stuck with the surprise of having to withdraw their additional contributions over the limits or getting hit with a tax bill for the additional contributions.

In order to make changes to your contributions as an employee, most employers make it easy to do either through an online portal, likely the same portal used to see your paystubs, or through the online portal of where your retirement account is held.

401(k), 457, 403(b) Retirement Plans

Most employees have one of the above retirement plans, as they have become the main vehicle for Americans to save for retirement. In 2025 the maximum contribution you could make for the entire year was $23,500 per year. In 2026, the contribution limits for these 401(k), 457 and 403(b) plans has increased by $1,000 to $24,500 for the year.

For employees age 50 or older, the contribution catchup that allows you to contribute more over the limit has been increased from $7,500 in 2025 to $8,000 in 2026, allowing these employees to contribute $32,500 for 2026 to their 401(k), 403(b), or 457 plans.

If you have maxed out your contributions for 2025 and are or are looking to max your contributions in 2026, you will have to review your elections come the new year and make adjustments to ensure you max out your contributions.

Individual Retirement Accounts

If individuals are not able to take advantage of the above plans, they most likely will have either a traditional or roth Individual retirement account (IRA).

The Roth IRA allows you to make contributions after income tax is paid, allowing the retirement withdrawals to be tax free when it comes time for those distributions. Traditional IRA contributions can be deducted from the individuals income tax in the year they were contributed, but the distributions in retirement are taxable.

These accounts had a total contribution limit in 2025 of $7,000 in total between the accounts for the year with a age 50 or older catchup provision of $1,000. In 2026 the contribution limit has been increased to $7,500 with a catchup increase of $1,100, allowing those 50 or older to contribute $8,600 throughout the year.

Making changes to these accounts is normally done through whatever financial institution where your account is held, either through a banks' wealth arm, a brokerage, or an online servicer.

Conclusion

With the price of everything and the cost of living going up, the IRS every year makes adjustments to the maximum retirement contributions to ensure that individuals with these accounts do not get left behind when it comes time for retirement.

Ensure that you at a minimum review your retirement and are aware of any changes at least once a year to make sure you're in compliance and maximizing your future retirement earnings and tax savings.