The IRS just announced new retirement savings limits for 2026. These changes affect 401(k) plans, IRAs, and other retirement accounts. Business owners and individual savers need to know how these updates impact their tax planning.
Notice 2025-67 details all the changes. The limits go up across most retirement account types. This reflects ongoing inflation and rising living costs.
How Much Can You Contribute to a 401(k) in 2026?
The 401(k) contribution limit rises to $24,500 in 2026. That’s a $1,000 increase from 2025’s $23,500 limit. This higher ceiling helps you save more while reducing your taxable income.
This new limit applies to several plan types. It covers 401(k) plans, 403(b) plans, most 457 plans, and the federal Thrift Savings Plan. All use the same $24,500 maximum.
What Are the Catch-Up Contribution Limits for Older Workers?
Workers age 50 and over get extra savings room. The standard catch-up limit increases to $8,000 for 2026. That’s up $500 from the current $7,500 limit.
Here’s where it gets interesting. The SECURE 2.0 Act created a special rule for workers aged 60 through 63. These individuals can contribute up to $11,250 in catch-up contributions.
This four-year window offers a powerful savings opportunity. If you fall in this age range, you can put away significantly more. The total 2026 limit for ages 60-63 reaches $35,750 ($24,500 + $11,250).
What Are the 2026 IRA Contribution Limits?
IRA limits are going up too. Both traditional and Roth IRAs now allow $7,500 in annual contributions. That’s a $500 increase from 2025’s $7,000 limit.
The IRA catch-up amount also rises slightly. Savers age 50 and older can add an extra $1,100. Combined with the base limit, eligible individuals can contribute $8,600 total to their IRA in 2026.
Can You Deduct Traditional IRA Contributions in 2026?
It depends on your income and workplace retirement plan status. The IRS uses income phaseout ranges to determine deductibility. These ranges increase each year.
If you have a workplace retirement plan, deduction limits vary by filing status. Here’s what you need to know for 2026.
- Single Taxpayers: The phaseout range runs from $81,000 to $91,000. Above $91,000, you can’t deduct traditional IRA contributions. Below $81,000, you get the full deduction.
- Married Filing Jointly (Active Participant): If the contributing spouse has workplace coverage, the range is $129,000 to $149,000. Full deductions phase out within this income band.
- Married Filing Jointly (Non-Participant Spouse): If you don’t have a workplace plan, but your spouse does, your phaseout range is $242,000 to $252,000. This gives you more room for deductible contributions.
- Married Filing Separately: The range stays fixed at $0 to $10,000. This filing status offers very limited deduction opportunities if you have workplace coverage.
What Are the Roth IRA Income Limits for 2026?
Roth IRAs have income restrictions on who can contribute. These limits also increase for 2026. High earners may be phased out completely.
- Single Filers and Heads of Household: Your contribution begins phasing out at $153,000. It completely eliminates at $168,000. Stay below $153,000 to contribute the full $7,500.
- Married Filing Jointly: The phaseout range spans $242,000 to $252,000. Above $252,000, you cannot make direct Roth IRA contributions.
- Married Filing Separately: The range remains at $0 to $10,000. This makes Roth contributions very difficult for married couples who file separately.
What Is the Saver’s Credit and Who Qualifies?
The saver’s credit helps lower-income workers save for retirement. It’s a tax credit (not a deduction) for eligible contributions. The credit can be worth up to $1,000 for individuals or $2,000 for couples.
Income limits for this credit increased for 2026. More taxpayers may now qualify.
- Married Filing Jointly: You qualify with income up to $80,500 (up from $79,000).
- Head of Household: The limit rises to $60,375 (up from $59,250).
- Single or Married Filing Separately: You’re eligible with income up to $40,250 (up from $39,500).
The credit percentage depends on your exact income level. Lower earners receive a larger credit percentage on their contributions.
Why Do These Changes Matter for Business Owners?
Business owners wear two hats with retirement planning. You’re saving for your own future while managing employee benefits. These limit increases affect both roles.
Higher contribution limits mean more tax deductions for your business. You can also save more personally while reducing current-year taxes. This dual benefit makes retirement plans powerful planning tools.
The 60-63 catch-up provision deserves special attention. If you’re in this age range, you have exceptional savings opportunities. You can defer significantly more income than younger or older business owners.
Plan sponsors must communicate these changes to employees. Workers need to know about increased limits before year-end. Many will want to adjust their 2026 contributions immediately.
How Should High-Income Earners Approach These Changes?
If you’re near IRA phaseout ranges, strategic planning becomes essential. Small income adjustments can preserve deduction eligibility or Roth contribution rights.
Consider timing income and deductions carefully. Deferring a year-end bonus might keep you below a phaseout threshold. Accelerating deductible expenses can have the same effect.
Backdoor Roth conversions remain a powerful strategy. If you’re above the direct contribution limits, this technique still works. You contribute to a traditional IRA, then convert to Roth.
What Actions Should You Take Before 2026?
Review your current contribution levels now. Many retirement plans allow you to increase deferrals for the new year. Don’t wait until January to make these changes.
Calculate how the new limits affect your tax situation. Higher contributions mean lower taxable income. This could drop you into a lower bracket or preserve certain deductions.
Business owners should review plan documents with their payroll provider. Some plans require amendments to reflect new contribution limits. Address this before year-end to avoid complications.
How Virtue CPAs Can Help
Retirement planning grows more complex every year. New rules, changing limits, and evolving strategies require expert guidance. Our team stays current on every regulatory change.
We help business owners design retirement plans that work hard for everyone. You maximize personal savings while offering competitive employee benefits. We ensure full compliance with all IRS requirements.
For individual clients, we create customized strategies based on your specific situation. We analyze how income phaseouts affect your options. Then we recommend the best mix of traditional, Roth, and taxable accounts.
Our approach goes beyond tax preparation. We provide proactive planning that anticipates changes before they happen. You’ll be positioned optimally year after year.
The 2026 increases take effect in just weeks. Now is the perfect time to review your retirement approach. Make sure you’re capturing every available tax benefit.
Schedule your consultation today. Call Virtue CPAs at (678) 952-9001 or email info@virtuecpas.com. Let’s build a retirement strategy that maximizes your savings and minimizes your taxes.
Frequently Asked Questions About 2026 Retirement Limits
1. When do the new contribution limits take effect?
January 1, 2026. You can start contributing at the new levels immediately when the year begins.
2. Do I need to notify my employer about increasing contributions?
Yes. Contact your HR or payroll department before year-end. They need time to process deferral changes.
3. Can I contribute to both a 401(k) and an IRA?
Absolutely. The limits are separate. You can max out both accounts in the same year.
4. What happens if I contribute too much?
You’ll face penalties on excess contributions. Withdraw excess amounts by your tax filing deadline to avoid ongoing penalties.
5. Are catch-up contributions mandatory?
No. They’re optional. You can contribute any amount up to the maximum limit.
