Key Highlights
- The Internal Revenue Service (IRS) has announced updated contribution limits for retirement savings plans in 2026.
- Average 401(k) balances reveal a gap between retirement promises and reality, according to Fox Business.
- Catch-up contributions for workers aged 50 and older will increase by $1,100 starting next year, allowing them to contribute an extra $7,500 in total.
- The contribution limit for traditional and Roth IRAs is rising from $7,000 this year to $7,500 in 2026.
New Contribution Limits for Retirement Plans in 2026
On November 14, 2025, the Internal Revenue Service (IRS) announced significant updates to retirement contribution limits for the upcoming year. These changes are part of a broader effort to ensure Americans have more flexibility and resources to save adequately for their future financial needs.
Increase in Contribution Limits
The IRS has set the 2026 contribution limit at $24,500 for retirement plans including 401(k), 403(b), governmental 457, and Thrift Savings Plan. This represents a $1,000 increase from the previous year’s limit of $23,500. For individuals aged 50 and older, who are eligible for catch-up contributions, the limit is set to rise by an additional $1,100, totaling $8,000 in total catch-up contributions.
IRA Contribution Limits
The IRA contribution limits will also increase next year. The limit for both traditional and Roth IRAs is set to rise from $7,000 this year to $7,500 in 2026. Additionally, people aged 50 and over who participate in these plans can now contribute an extra $1,100 through catch-up contributions.
Impact on Retirement Savings
The changes are designed to provide more room for savers to build their retirement savings. Lisa Featherngill, national director of strategic wealth and business advisory at Comerica Wealth Management, stated that the new limits give people “more room to save, which is especially helpful as retirement gets longer and more expensive.” This aligns with the findings from a recent study indicating Americans are underprepared for extended retirement years due to longer life expectancies.
Phase-Out Ranges
The phase-out ranges for deducting contributions made to traditional IRAs will also increase. For single taxpayers covered by a workplace retirement plan, the range is set between $81,000 and $91,000 in 2026, an increase from $79,000 to $89,000 this year. Married couples filing jointly face a phase-out range of between $129,000 and $149,000 for the spouse making the IRA contribution who is covered by a workplace retirement plan.
For Roth IRAs, the phase-out ranges will rise to between $153,000 and $168,000 for singles and heads of households.
For married filers, the range will increase to between $242,000 and $252,000 in 2026, up from $237,000 and $247,000 this year.
These changes reflect a broader recognition of the need for robust retirement planning amidst evolving economic conditions. The IRS continues to update contribution limits annually based on cost-of-living adjustments as mandated by the SECURE 2.0 Act.
Expert Perspective
Average 401(k) balances reveal a significant gap between what Americans promise and what they actually save for retirement, according to “Making Money” host Charles Payne discussing with Rebecca Walser from Walser Wealth Management on Fox Business. The new contribution limits are aimed at closing this gap by providing more opportunities for individuals to enhance their savings.
As the IRS considers these updates annually, future adjustments may further influence how Americans plan and save for retirement, ensuring that they have the resources necessary to maintain their quality of life in later years.
