Planning for retirement has become a necessity for everyone. Amid the rising inflation and uncertain economic conditions, a normal savings account is simply not enough.
The 401(k) retirement account is very popular among working Americans because it not only helps in accumulating money for the future but also provides tax benefits.
The IRS revises the contribution limits for 401(k) plans every year. The updated limits for 2026 were released in November 2025. For complete details about it, please read this article thoroughly.
2026 IRS 401(k) Contribution Limits
The IRS has increased the 401(k) contribution limit for the 2026 tax year; the current limit is $24,500. It is deducted directly from the employees’ salaries, which can be done either pre-tax or as a Roth (after-tax) contribution.
It means that an individual can contribute a maximum of $24,500 to their 401(k) account throughout the year 2026, resulting in lower taxable income and the accumulation of a substantial fund for retirement.
What is a 401(k), and how does it work?
A 401(k) is an employer-sponsored retirement plan in which employees contribute a portion of their salary. Some companies also offer an employer match, meaning that the company contributes the same amount as the employee.
Its main advantage is that the money invested in it receives tax benefits, and due to long-term compounding, a substantial sum is accumulated after retirement.
Employee Contribution Limit in 2026
The employee contribution limit for tax year 2026 is $24,500. It applies not only to 401(k) plans but also to 403(b) and some 457 plans.
One thing that is very important for you to know is that even if you work for more than one company, you cannot contribute more than the prescribed limit.
Catch-Up Contributions for those aged 50 or older
According to Internal Revenue Service rules, individuals who are over 50 years old can also take advantage of catch-up contributions, meaning they have the opportunity to contribute more.
- The catch-up contribution limit is $8,000.
- Since the IRS has set the 401(k) contribution limit for 2026 at $24,500, adding the $8,000 catch-up contribution will result in a total of $32,500.
- Every individual who is over 50 years old can contribute $32,500 to a 401(k) plan in 2026.
This rule proves beneficial for those who have contributed very little to their retirement savings at the beginning of their working years.
Special catch-up rules for those aged 60 to 63
For employees who have reached an age between 30 and 60 years, the catch-up contribution amount is higher than that for individuals over 50 years of age.
- The catch-up contribution limit for them is $11,250.
- As the 401(k) contribution limit for tax year 2026 has been set at $24,500. In this scenario, individuals between the ages of 60 and 63 will be able to contribute a total of $35,750 in 2026.
Employer Contribution and Total Limit
Since both employees and employers can contribute to a 401(k) plan, it involves two components: employer matching and profit sharing.
The total contribution that can be made by both the employee and the employer in tax year 2026 is limited to $72,000.
Keep in mind that this excludes catch-up contributions; adding these separately increases the maximum limit.
Roth 401(k) and Pre-Tax 401(k) Difference
There are two types of 401(k) plans: the first is a pre-tax 401(k), and the second is a Roth 401(k). We have listed the details of both below.
- Pre-Tax 401(k): In this situation, the contributions are made before taxes are deducted. As a result, when the funds are withdrawn after retirement, taxes are payable.
- Roth 401(k): The contributions to this account are made after tax deductions, which means that when money is withdrawn from it after retirement, there is no need to pay any further tax, as the tax has already been paid.
The contribution limit is the same for both, but one thing you should know is that individuals with higher incomes have to make their catch-up contributions to a Roth account.
Disclaimer: IRS 401(k) contribution limits for 2026 are for informational purposes only. Official limits are determined by the IRS.
