Better Late Than Never: IRS Announces 2026 Retirement Plan Cost-of-Living Adjustments
On November 13, the Internal Revenue Service (IRS) released Notice 2025-67, which contains the new dollar limitations for retirement plans that go into effect on January 1, 2026. Due to the federal government shutdown, this update came later than normal, leaving Human Resources (HR), payroll, and benefits teams with less time to implement changes.
The new 401(k) plan limits are summarized in the table below:
| 401(k) Plan Limit | 2026 Limit | 2025 Limit | Change |
| Elective Deferrals | $24,500 | $23,500 | ↑ $1,000 |
| Catch‑Up (Age 50+) | $8,000 | $7,500 | ↑ $500 |
| “Super” Catch‑Up (Age 60–63) | $11,250 | $11,250 | No change |
| Roth Catch‑Up FICA Wage Threshold (NEW) | $150,0001 | $145,0002 | ↑ $5,000 |
| Highly Compensated Employee Threshold | $160,0003 | $160,0003 | No change |
| Key Employee Threshold (Top‑Heavy Plans) | $235,000 | $230,000 | ↑ $5,000 |
| Annual Compensation Limit | $360,000 | $350,000 | ↑ $10,000 |
| Annual Additions Limit (Code section 415(c)) | $72,000 | $70,000 | ↑ $2,000 |
1 An employee who received more than $150,000 of Social Security wages in 2025 will be subject to the mandatory Roth catch-up requirements in 2026.
2 Although the IRS published a Roth Catch-Up FICA Wage Threshold for 2025, it was not applicable because the requirement to implement mandatory Roth catch-up contributions was not effective in 2025.
3 Compensation paid in the year shown determines who is considered highly compensated in the following year. For example, someone receiving $160,000 of pay in 2025 is considered a highly compensated employee for 2026. And someone receiving $160,000 of pay in 2026 will be considered a highly compensated employee for 2027.
Updated limits for other plan types are as follows:
| Plan Type / Limit | 2026 Limit | 2025 Limit | Change |
| Defined Benefit Plan Annual Benefit Limit | $290,000 | $280,000 | ↑ $10,000 |
| 403(b) Elective Deferrals | $24,500 | $23,500 | ↑ $1,000 |
| 403(b) Catch-Up (Age 50+) | $8,000 | $7,500 | ↑ $500 |
| 403(b) “Super” Catch-Up | $11,250 | $11,250 | No change |
| 457(b) Contributions | $24,500 | $23,500 | ↑ $1,000 |
| SIMPLE Plan Elective Deferrals | $17,000 | $16,500 | ↑ $500 |
| SIMPLE Catch‑Up (Age 50+) | $4,000 | $3,500 | ↑ $500 |
| SIMPLE “Super” Catch‑Up (Age 60–63) | $5,250 | $5,250 | No change |
| IRA Contributions | $7,500 | $7,000 | ↑ $500 |
| IRA Catch-Up Contributions (Age 50+) | $1,100 | $1,000 | ↑ $100 |
What should I do now? Given that this update is coming so late in the year, HR professionals should act quickly to:
- Ensure payroll and HRIS systems will be updated on time to reflect relevant 2026 limits before the first paycheck in January.
- Revise benefits communication materials, including enrollment guides and intranet pages. If you have already sent out revised materials for 2026 that did not include the 2026 limits, consider sending an email or another short communication to employees to draw attention to the updated limits.
