Retirement Account Tax Adjustments for Year 2026

The IRS has announced important cost-of-living adjustments for the 2026 tax/plan year that will impact several retirement plan limits. These changes are designed to help employees keep pace with inflation and maximize their retirement savings opportunities. Below are the key updates you should be aware of:

• The employee deferral limit for 401(k), 403(b), and 457 plans will increase from $23,500 to $24,500 in 2026.
• Individuals who turn age 50 by the end of 2026 may make an additional catch-up contribution of $8,000 (up from $7,500 in 2025).
• Those age 60–63 may contribute $11,250 for the 2026 tax/plan year (unchanged from 2025), instead of the standard over-50 catch-up limit.
• The income threshold for the new Roth Catch-Up Mandate effective in 2026 has been raised from $145,000 to $150,000. More details on this rule (effective 1/1/26) will be shared in a separate email later this week.
• The IRS compensation limit for retirement plan purposes will increase from $350,000 to $360,000.

If any employees plan to maximize contributions at the IRS limit, please ensure their payroll contributions are updated for the first pay date of 2026 and submit a new election if needed. For any questions or assistance, please reach out to your HFCO accounting professional.

Source: irs.gov