IRS releases 2026 retirement and fringe benefit plan limitations
2026 retirement plan and certain fringe benefit limits released
The IRS issued Notice 2025-67, which modifies the annual limits for retirement plans. These limits are updated annually for cost-of-living adjustments. The IRS also issued Rev. Proc. 2025-19 and 2025-32 to update certain additional inflation-adjusted items for 2026.
2026 limits relating to retirement plans, IRAs and certain fringe benefits
Retirement plans and individual retirement arrangements (IRAs). Effective Jan. 1, 2026, the following limits apply for qualified retirement plans and IRAs:
| 2026 | 2025 | 2024 | 2023 | |
|---|---|---|---|---|
| 401(k), 403(b) and 457 elective deferral limit | $24,500 | $23,500 | $23,000 | $22,500 |
| Catch-up contribution limit (age 50–59 and 64+) | $8,000 | $7,500 | $7,500 | $7,500 |
| Catch-up contribution limit (age 60–63) | $11,250 | $11,250 | – | – |
| Annual compensation limit | $360,000 | $350,000 | $345,000 | $330,000 |
| Defined contribution plan limit | $72,000 | $70,000 | $69,000 | $66,000 |
| Defined benefit plan limit | $290,000 | $280,000 | $275,000 | $265,000 |
| Definition of highly-compensated employee | $160,000 | $160,000 | $155,000 | $150,000 |
| Key employee | $235,000 | $230,000 | $220,000 | $215,000 |
| IRA contribution limit | $7,500 | $7,000 | $7,000 | $6,500 |
| IRA catch-up contributions (age 50+) | $1,100 | $1,000 | $1,000 | $1,000 |
| SIMPLE IRA and SIMPLE 401(k) salary deferral limit | $17,000 | $16,500 | $16,000 | $15,500 |
| SIMPLE IRA and SIMPLE 401(k) catch-up (age 50–59 and 64+) | $4,000 | $3,500 | $3,500 | $3,500 |
| SIMPLE IRA and SIMPLE 401(k) catch-up (age 60–63) | $5,250 | $5,250 | – | – |
Highlights
- PLEASE NOTE: The SECURE (Setting Every Community Up for Retirement Enhancement) Act of 2022 (SECURE 2.0) implemented a requirement that certain highly paid individuals must have all catch-up deferrals treated as designated Roth contributions. This requirement becomes effective in 2026. All guidance issued before Notice 2025-67 has indicated that a highly paid individual for this purpose is someone whose Federal Insurance Contributions Act (FICA) wages exceed $145,000 in the prior year. That threshold has been updated to $150,000. Therefore, an individual with FICA wages more than $150,000 for 2025 will be subject to the Roth catch-up requirement in 2026. Employers should confirm with their payroll provider and third-party retirement plan administrator that this threshold is properly applied.
- Catch-up contributions are permitted to be made for participants beginning in the year in which they turn age 50. Beginning in 2025, a higher catch-up limit applies for individuals turning 60, 61, 62 and 63 during the year. These increased limits are separately identified in the above table.
- IRA phase-outs: Income phase-out ranges for various IRA purposes increased for 2026. Specifically, the phase-out range to determine deductible IRA contributions for single and head-of-household taxpayers increased from between $79,000 and $89,000 to between $81,000 and $91,000. Similar incremental changes were made to the limits for married filing jointly and married filing separate taxpayers and for phase-outs related to eligibility to contribute amounts to a Roth IRA. For more information, refer to Notice 2025-67.
- The IRA catch-up contribution limit for individuals aged 50 and over was amended under SECURE 2.0 to include an annual cost-of-living adjustment and increases in 2026 to $1,100 from $1,000.
- SIMPLE plans: The deferral an individual may contribute to a SIMPLE retirement plan is increased to $17,000 from $16,500. Participants in certain SIMPLE 401(k) and SIMPLE IRA plans can take advantage of an increased deferral limit of $18,100 and an increased catch-up limit of $3,850 (unchanged from 2025) if their employer meets one of the following conditions:
a. Has 25 or fewer employees receiving at least $5,000 of compensation, or
b. Has more than 25 but not more than 100 employees and makes either a 4% matching contribution or a 3% nonelective contribution.
The catch-up contribution limit may be increased again to $5,250 in the case of participants attaining age 60, 61, 62 and 63 during 2026.
Fringe benefits. Effective Jan. 1, 2026, the following limits apply with respect to certain fringe benefits:
| 2026 | 2025 | 2024 | 2023 | |
|---|---|---|---|---|
| Qualified Transportation Fringe (QTF) combined commuter highway vehicle and transit passes (monthly) | $340 | $325 | $315 | $300 |
| QTF qualified parking (monthly) | $340 | $325 | $315 | $300 |
| Health flexible spending account | $3,400 | $3,300 | $3,200 | $3,050 |
| Health savings account (self-only) | $4,400 | $4,300 | $4,150 | $3,850 |
| Health savings account (family) | $8,750 | $8,550 | $8,300 | $7,750 |
| Health savings account catch-up (age 55 and older) | $1,000 | $1,000 | $1,000 | $1,000 |
Refer to Rev. Proc. 2025-32 for a complete list of inflation-adjusted items for 2026.
Takeaway
The limits shown above become effective Jan. 1, 2026. Employers should review these changes and determine whether any updates to their plan administration or documentation are needed. Individual taxpayers should also consult with their tax advisers on how these changes may impact their qualified plan accounts. Any necessary action on behalf of employers to prepare for these limit changes, such as conversations with plan recordkeepers, third-party administrators or payroll vendors should be completed in the near term. Employers are also reminded that retirement plans that run on a fiscal year should be careful when applying these changes, as some limits are always calendar-year limits (e.g., the elective deferral limit), while other limits apply on a plan-year-beginning (e.g., the annual compensation limit) or ending (e.g., annual addition limit) basis.
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