Each year, the IRS updates retirement plan limits to keep up with inflation, making sure savers don’t lose ground as the cost of living rises.
Notice 2025-67 sets out the specific cost-of-living adjustments for retirement plan limits and related amounts for 2026.
Retirement Plan Contribution Limits
Effective January 1, 2026, the annual benefit limit for defined benefit plans increases from $280,000 to $290,000. For defined contribution plans, the limit rises from $70,000 to $72,000.
Additionally, the exclusion limit for elective deferrals under section 402(g)(1) and section 457(e)(15) is increased from $23,500 to $24,500. Catch-up contributions for individuals aged 50 or older are raised from $7,500 to $8,000, while those for individuals aged 60 to 63 remain at $11,250.
Adjusted Income Limits for Retirement Savings Credits
The adjusted gross income limits for retirement savings contributions credits are also increased. For married taxpayers filing jointly, the limits rise from $47,500 to $48,500, and from $51,000 to $52,500 for the next tier. For heads of household, the limits increase from $35,625 to $36,375, and from $38,250 to $39,375. For all other taxpayers, the limits rise from $23,750 to $24,250 and from $25,500 to $26,250.
IRA Contribution Deductions and Phase-Outs
The deductible amount for individual retirement account (IRA) contributions increases from $7,000 to $7,500, with an additional $1,100 for individuals aged 50 and older. The phase-out ranges for IRA contributions are adjusted, with single individuals and heads of household now phased out between $81,000 and $91,000, and married couples filing jointly between $129,000 and $149,000.
Charitable Contributions and Other Adjustments
The aggregate amount of qualified charitable distributions not included in gross income rises from $108,000 to $111,000. The limit for eligible distributions to victims of domestic abuse increases from $10,300 to $10,500. Additionally, the compensation threshold for employees excluded from the small employer pension plan startup cost credit rises from $105,000 to $110,000.
Conclusion
These adjustments reflect annual cost-of-living increases and aim to enhance retirement savings opportunities for individuals across various income levels and age groups. For most taxpayers, these increases modestly expand the amount they can save on a tax-advantaged basis.
Hani Sarji
New York lawyer who cares about people, is fascinated by technology, and is writing his next book, Estate of Confusion: New York.
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