The IRS recently announced its long-awaited 2026 contribution limits – delayed due to the government shutdown - for retirement plans and individual retirement accounts (IRAs).
For 2026, the annual contribution limit for employees participating in their employer’s retirement plan (i.e., 401(k) and 403(b) plans) has been increased to $24,500, up from $23,500 in 2025. The catch-up contribution limit (which generally applies to employees aged 50 and over) has been increased to $8,000, up from $7,500 for 2025, for a total of $32,500. Under a change made in SECURE 2.0, a higher catch-up contribution limit - known as a “super” catch-up - applies to employees aged 60, 61, 62 and 63. For 2026, this “super” catch-up contribution limit remains $11,250, making the total limit $35,750 for those in the 60-63 age band.
The limit on annual contributions to an IRA has been increased to $7,500, up from $7,000 in 2025. The IRA catch‑up contribution limit for individuals aged 50 and over has been increased to $1,100, up from $1,000 for 2025, for a total of $8,600.
Taxpayers can deduct contributions made to a traditional IRA if certain conditions are met. If, during the year, either the taxpayer or the taxpayer’s spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. If neither the taxpayer nor their spouse is covered by an employer’s retirement plan, the phase-outs of the deduction do not apply. The phaseout ranges for 2026 are as follows:
For single taxpayers covered by a workplace retirement plan, the phase-out range is increased to between $81,000 and $91,000, up from between $79,000 and $89,000 for 2025.
For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is increased to between $129,000 and $149,000, up from between $126,000 and $146,000 for 2025. For an IRA contributor who is not covered by a workplace retirement plan, the phase-out range is increased to between $242,000 and $252,000, up from between $236,000 and $246,000 for 2025.
For a married individual filing a separate return, who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
The IRS places limits on the ability to contribute to a Roth IRA based on household income. The income phase-out range for taxpayers making contributions to a Roth IRA is increased to between $153,000 and $168,000 for single filers and heads of household, up from between $150,000 and $165,000 for 2025. For married couples filing jointly, the income phase-out range is increased to between $242,000 and $252,000, up from between $236,000 and $246,000 for 2025. The phase-out range for married individuals filing a separate return who make contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
With so many changes in the contribution limits and income phase-out levels, it is always advised to check with your tax or financial professional to make certain you are contributing the correct amount to your IRA, 403(b) or 401(k) plan.
The beginning of a new year is a great time to check the asset allocation of your retirement account and confirm the degree of investment risk you are willing to accept. One advantage to making asset allocation changes in a retirement plan is that the trades will not generate any currently taxable capital gains. After three good years in the U.S. stock market, a 60% stock and 40% bond allocation, for example, will tend to drift to a higher stock allocation relative to the bond allocation. This will most likely increase the risk inherent in the portfolio, so rebalancing the portfolio back to its intended allocation will help maintain the acceptable amount of investment risk.