Retirement · IRS Notice 2025-67 · SECURE 2.0 · Tax Year 2026
The 2026 employee elective deferral limit is $24,500. The age-50 catch-up is $8,000. The SECURE 2.0 super catch-up at ages 60 to 63 is $11,250. Total annual additions are capped at $72,000. This guide covers the limits, the catch-up tiers, the new Roth catch-up requirement for high earners, employer match formulas, and year-end planning moves.
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Open the Calculator →For 2026, the IRS employee 401(k) deferral limit is $24,500 (up from $23,500 in 2025). Workers age 50 and over add an $8,000 catch-up for $32,500. Workers ages 60 to 63 use the SECURE 2.0 super catch-up of $11,250 for $35,750. Combined employee + employer + forfeitures cannot exceed $72,000 (under 50), $80,000 (50 with catch-up), or $83,250 (60-63). Compensation considered for the match is capped at $360,000. The 2026 HCE threshold remains $160,000.
The IRS published 2026 retirement plan cost-of-living adjustments in Notice 2025-67 (released October 2025). These numbers govern every 401(k), 403(b), and most 457(b) plans for the calendar year 2026, plus most plan-year-2026 nondiscrimination tests.
| Limit | 2026 | 2025 | Change |
|---|---|---|---|
| Employee elective deferral (§402(g)) | $24,500 | $23,500 | +$1,000 |
| Catch-up age 50+ (§414(v)) | $8,000 | $7,500 | +$500 |
| Super catch-up ages 60-63 (SECURE 2.0 §109) | $11,250 | $11,250 | None |
| Annual additions (§415(c)) | $72,000 | $70,000 | +$2,000 |
| Compensation limit (§401(a)(17)) | $360,000 | $350,000 | +$10,000 |
| HCE threshold (§414(q)) | $160,000 | $160,000 | None |
| Key employee top-heavy (§416(i)) | $235,000 | $230,000 | +$5,000 |
| Roth catch-up wage threshold (prior year) | $150,000 | $145,000 | +$5,000 |
| Personal max under age 50 | $24,500 | $23,500 | +$1,000 |
| Personal max ages 50-59 or 64+ | $32,500 | $31,000 | +$1,500 |
| Personal max ages 60-63 | $35,750 | $34,750 | +$1,000 |
The $24,500 figure is the headline employee limit, but it is not the full picture. With age-50 catch-up the personal max becomes $32,500. With the SECURE 2.0 super catch-up at ages 60 to 63, the personal max becomes $35,750. And when you add the employer match and any profit-sharing contribution, the combined cap is $72,000 (or up to $83,250 with super catch-up).
The base limit, codified in IRC section 402(g), caps total employee salary deferrals across all 401(k), 403(b), SARSEP, and SIMPLE plans you participate in during 2026. The cap is per employee, not per plan, so changing jobs mid-year does not reset the count.
Practical implications:
The W-2 reports your elective deferrals in Box 12 with code D (traditional), code AA (Roth), or code BB (Roth 403(b)). Verify your year-end W-2 against your December paystub to catch errors before they become excess deferral problems.
IRC section 414(v) permits an additional "catch-up" contribution for participants who reach age 50 by the end of the calendar year. The standard catch-up for 2026 is $8,000. SECURE 2.0 Act section 109 added a higher tier - the super catch-up - for participants ages 60, 61, 62, and 63. The super catch-up for 2026 is $11,250.
| Age at Year-End | Base Limit | Catch-Up | Personal Max |
|---|---|---|---|
| Under 50 | $24,500 | $0 | $24,500 |
| 50-59 | $24,500 | $8,000 | $32,500 |
| 60, 61, 62, 63 | $24,500 | $11,250 | $35,750 |
| 64 and over | $24,500 | $8,000 | $32,500 |
The catch-up window opens on January 1 of the year you turn 50, not on your birthday. A worker who turns 50 in November 2026 can defer the full $8,000 catch-up over the entire year, including months before the birthday. The same applies to the super catch-up: a worker who turns 60 in 2026 qualifies for the full $11,250 enhanced catch-up. A worker who turns 64 in 2026 reverts to the standard $8,000.
Catch-up contributions follow the same per-employee aggregation as the base limit. If you participate in two unrelated employers' 401(k) plans, you can split the $8,000 (or $11,250) across the two plans in any proportion, but the combined catch-up cannot exceed the per-employee statutory amount. Catch-up contributions do NOT count toward the IRC section 415(c) annual additions limit, which is why a 50-year-old can total $80,000 ($72,000 + $8,000) and a 61-year-old can total $83,250 ($72,000 + $11,250).
IRC section 415(c) caps the total annual contributions to a participant's account from a single employer. For 2026, that cap is $72,000. The cap includes:
The cap does NOT include catch-up contributions, so a 50-year-old's effective combined ceiling is $80,000 and a 60-to-63-year-old's is $83,250. The cap also cannot exceed 100 percent of the participant's compensation, which protects low-income deferrers from over-contribution.
Critically, the 415(c) limit applies per employer. If you participate in two unrelated employers' plans during 2026, each plan independently has a $72,000 cap. This is how Solo 401(k) participants and side-job earners can accumulate large total annual additions: a $24,500 elective deferral to the W-2 employer's plan can sit alongside a $72,000 employer profit-sharing contribution from a self-employment Solo 401(k), since the $24,500 elective deferral aggregates across plans but the employer side does not.
IRC section 401(a)(17) caps the compensation considered for retirement plan purposes at $360,000 in 2026 (up from $350,000). This cap matters for the employer match calculation, the profit-sharing allocation, and the cross-tested plan formulas.
What this means in practice: if a $500,000-earner participates in a plan that matches 100 percent of the first 6 percent of pay, the match base is $360,000, not $500,000. Maximum match becomes $21,600 instead of $30,000. The employee can still contribute the full $24,500 elective deferral and any catch-up, but the employer side is constrained.
The compensation cap also constrains the safe harbor non-elective contribution (3 percent of pay) and the integrated profit sharing formulas. For very high earners, plan design (cash balance plan, defined benefit plan, or a 401(k) + DB combo) is the standard solution to overcome the $360,000 limitation.
Employer match formulas are set by the plan, not by the IRS. The four most common designs in private-sector plans are:
100 percent of the first 3 percent of pay deferred, plus 50 percent of the next 2 percent. Maximum employer match is 4 percent of pay if the employee defers at least 5 percent. This formula is "safe harbor" because it qualifies the plan for an automatic exemption from ADP, ACP, and top-heavy testing.
100 percent of the first 4 percent plus 50 percent of the next 2 percent (or 100 percent of the first 5 percent, or 100 percent of the first 4 percent flat). Maximum match is typically 5 percent of pay. Also qualifies as safe harbor.
The employer matches half of the employee's first 6 percent deferral. Maximum match is 3 percent of pay. Employee must defer 6 percent to capture the full match. Common in mid-size and large private-sector plans. May or may not be safe harbor depending on plan design.
Dollar-for-dollar match on the first 6 percent of pay. Maximum match is 6 percent of pay. More common at large tech employers and competitive industries. Employee must defer 6 percent to capture the full match.
Both flavors share the same $24,500 elective deferral limit for 2026. The difference is when you pay tax:
| Feature | Traditional | Roth |
|---|---|---|
| Tax treatment of contribution | Pre-tax (reduces W-2 box 1) | After-tax (no current deduction) |
| Tax treatment of growth | Tax-deferred | Tax-free |
| Tax treatment of qualified withdrawal | Ordinary income | Tax-free (if 59½ and 5-year rule met) |
| FICA tax on contribution | Yes (6.2% + 1.45%) | Yes (6.2% + 1.45%) |
| 2026 elective deferral limit | $24,500 | $24,500 (combined) |
| Catch-up rules | $8,000 (50+) / $11,250 (60-63) | Same |
| Required minimum distributions (RMD) | Yes, starting age 73 | None during owner's lifetime (SECURE 2.0 §325) |
| 5-year holding period | N/A | Each Roth conversion or contribution starts a 5-year clock |
| Income limit to participate | None | None (Roth 401(k) has NO income limit, unlike Roth IRA) |
The choice between traditional and Roth turns on your current marginal tax rate vs your expected retirement marginal rate. Higher current rate = traditional generally wins. Higher retirement rate = Roth generally wins. The same dollar deferral has equal value if rates are equal. Most employees benefit from a mix.
SECURE 2.0 Act section 325 (effective 2024) eliminated lifetime RMDs from Roth 401(k) accounts, matching the Roth IRA treatment. This makes Roth 401(k) more useful for legacy planning. SECURE 2.0 section 604 also permits employer match contributions to be designated as Roth at the employee's election (subject to plan adoption).
SECURE 2.0 Act section 603 changed the rules for catch-up contributions made by high earners. Beginning with catch-ups made in 2026, participants age 50 or over with prior-year FICA wages above the inflation-adjusted threshold from the same employer must designate any catch-up contribution as Roth (after-tax). The threshold for 2026 catch-ups is $150,000 of 2025 FICA wages.
The rule does NOT change the catch-up amount, only the tax treatment. A 55-year-old earning $200,000 from one employer in 2025 can still make the $8,000 catch-up in 2026, but it must be Roth, not traditional pre-tax. There is no opt-out for the affected employee.
The IRS issued final regulations (T.D. 10026) on September 16, 2025. The regulations include a transition period: full enforcement generally begins for plan years starting after December 31, 2026. Many employer plans are implementing the rule earlier; some are using the transition period and deferring full implementation to 2027 plan year. Confirm with your plan administrator whether your 2026 catch-up will be subject to the Roth requirement.
Plans that do not offer Roth elective deferrals must either add a Roth feature or stop accepting catch-up contributions from employees who exceed the wage threshold. Most plans are choosing to add Roth rather than lose catch-up participation, since older high earners are the largest source of catch-up contributions and a major retention factor.
The "FICA wages" threshold uses Box 3 of your W-2 (Social Security wages) from the prior year. Wages from multiple employers do NOT aggregate by default; only wages from the same employer (or its controlled group) count. So a $300,000 earner who worked at two unrelated companies for $150,000 each in 2025 is NOT subject to the Roth catch-up rule in 2026 because neither employer paid the threshold from a single source.
Also note that the $150,000 wage threshold is below Social Security's $176,100 wage base for 2025, so it can apply even to employees whose wages are within the SS wage cap.
Under IRC section 414(q), you are a Highly Compensated Employee (HCE) for the 2026 plan year if you earned more than $160,000 in 2025 (the prior year, due to the lookback rule), or owned more than 5 percent of the employer at any time during 2025 or 2026. The 2026 HCE threshold is unchanged from 2025.
HCE status matters because non-safe-harbor 401(k) plans must pass Actual Deferral Percentage (ADP) and Actual Contribution Percentage (ACP) nondiscrimination tests. The tests compare HCE deferrals to non-HCE (NHCE) deferrals. If HCE deferrals exceed permitted levels relative to NHCEs, the plan must either return excess deferrals to HCEs (taxable in year contributed), make qualified non-elective contributions (QNECs) for NHCEs, or recharacterize HCE deferrals as catch-up.
Practical impact: if you are an HCE in a non-safe-harbor plan, your effective elective deferral cap may be below the statutory $24,500. Many large employers structure plans as safe harbor specifically to avoid ADP testing and remove this constraint. Ask your plan administrator whether the plan is safe harbor and what your specific cap is.
If your combined elective deferrals across all plans exceed the IRC section 402(g) limit ($24,500 for 2026, plus catch-up if applicable), you have an excess deferral. The remedy is to:
The April 15 deadline is fixed and does NOT extend with your filing extension. If you file your return on October 15 with an extension but the excess is still in the plan after April 15, you face the double-tax penalty: the excess is taxable in the contribution year (now) AND again when eventually distributed in retirement. There is no way to undo this once April 15 passes.
The most common cause of excess deferrals is changing jobs mid-year. Employer A withholds $15,000 by August; you start at Employer B in September with a 15 percent default deferral on $80,000 annualized; that defers another $12,000 by year-end; total $27,000 = $2,500 excess. Catch this by manually checking your YTD deferrals on every paystub after a job change.
Some employer 401(k) plans permit voluntary after-tax (non-Roth) employee contributions on top of the $24,500 elective deferral, up to the $72,000 annual additions cap. The math: $72,000 cap minus $24,500 elective deferral minus employer match leaves a substantial after-tax contribution capacity for high earners.
The "Mega Backdoor Roth" strategy involves two steps:
The strategy requires three plan features: voluntary after-tax contributions, in-plan Roth rollovers (or in-service distributions), and ACP testing accommodations. Most large employer plans permit it; most small employer plans do not. The strategy was not affected by SECURE 2.0 or OBBBA.
Maximum 2026 Mega Backdoor Roth at full execution: $72,000 cap minus $24,500 elective deferral minus, say, $10,000 employer match = $37,500 of after-tax contribution converted to Roth annually. This is the most powerful tax-advantaged retirement contribution available to W-2 employees.
Most states with an income tax conform to federal pre-tax 401(k) treatment, meaning your traditional contributions reduce state taxable income just as they reduce federal. A few important exceptions:
FICA tax (Social Security 6.2 percent + Medicare 1.45 percent) applies to 401(k) elective deferrals regardless of pre-tax or Roth treatment, under IRC section 3121(a)(5). There is no FICA tax savings from any 401(k) contribution. This contrasts with HSA contributions made through cafeteria plan payroll deduction, which are exempt from FICA.
Diana's 2025 FICA wages from her employer were $170,000, above the $150,000 threshold, so her 2026 catch-up of $8,000 must be designated as Roth under SECURE 2.0 section 603. She still gets the $5,390 federal tax savings on the $24,500 traditional base deferral. Her employer's 100% of first 4% match contributes another $7,200 of "free money." Total she puts away in 2026: $39,700 ($32,500 her deferral + $7,200 match), of which $24,500 is pre-tax, $8,000 is Roth, and $7,200 is employer pre-tax match.
The single most expensive 401(k) mistake we see at LMN Tax Inc is high earners who max out the elective deferral by July or August and then receive zero employer match for the rest of the year. A $200K-earner with a 15 percent default deferral hits $24,500 around early July; if the plan matches per pay period without true-up, the employee captures match on pay periods one through about thirteen and then loses it for periods fourteen through twenty-six. A $12,000 match becomes $6,000. The fix is to lower the deferral rate to spread the contribution across all 26 pay periods, or to confirm in writing that the plan has a year-end true-up. Either move recovers the missed match dollar-for-dollar with no market risk. The second most expensive mistake is failing to defer at least enough to capture the full match - leaving the equivalent of a guaranteed 50 to 100 percent return on the table. Always check the Summary Plan Description before maxing out early, and always defer at least to the match cap.
For workers age 50 or over: separately track your catch-up contribution to confirm it does not exceed the $8,000 standard or $11,250 super catch-up. For high earners with 2025 FICA wages above $150,000, confirm your plan's SECURE 2.0 section 603 implementation status before deferring catch-up as Roth or traditional.
If you are not already deferring at least enough to capture the full employer match, raise your contribution rate. The match is an immediate 50 to 100 percent return on the deferred dollar with zero market risk and is the highest-priority retirement move available to most W-2 employees.
Use the 401(k) Contribution Calculator to estimate your 2026 contribution, employer match, total annual additions, and federal tax savings in seconds based on your age, salary, deferral rate, and plan formula.
If you turned 50 in 2026 or earlier, evaluate the standard $8,000 catch-up. If you turned 60, 61, 62, or 63 in 2026, the $11,250 SECURE 2.0 super catch-up may be available - check that your plan has adopted the super catch-up, since plan adoption is required (not automatic).
If your 2025 FICA wages from a single employer exceeded $150,000 and you plan to make a catch-up in 2026, confirm with your plan administrator whether the catch-up will be required to be designated as Roth under SECURE 2.0 section 603. Plans are at different stages of implementation through the IRS transition period.
Self-employed? The Solo 401(k) calculation differs because you contribute as both employer and employee. Use the SEP IRA vs Solo 401(k) Calculator for the self-employment-specific math, including the circular SE-tax-adjusted compensation formula.
Pair your 401(k) planning with W-4 review. After raising your traditional deferral, your federal income tax withholding may be too high for the rest of the year. Use the W-4 Withholding Calculator to verify your withholding is right-sized.