IRS issues 2026 cost-of-living adjustments for retirement plans in new notice
On November 13, 2025, after a lengthy government shutdown, the IRS released IRS Notice 2025-67, providing for the new cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for the 2026 Tax Year. Changes to the limits are made each year based on the Social Security cost-of-living increases for the prior 12-month period. This year, the cost-of-living increase was slightly higher than last year, so the 2026 limits have increased accordingly.
New for 2026 is the often-criticized requirement that Catch-up contributions for employees above a certain wage threshold must be made on a Roth basis. As shown in the chart below, the threshold for 2026 is $150,000 of Social Security wages. This means that if any employee with 2025 Social Security wages exceeding $150,000 makes Catch-up contributions in 2026, those Catch-up contributions must be made on a Roth basis.
2026 Retirement Plan Limits:
|
2026 |
2025 |
2024 |
|
|
401(k),403(b) and 457(b) Deferral Limits |
$24,500 |
$23,500 |
$23,000 |
|
401(k) and 403(b) Catch-up Deferral Limits (age 50-59, 64+) |
$8,000 |
$7,500 |
$7,500 |
|
401(k) and 403(b) Catch-up Deferral Limits (age 60-63) |
$11,250 |
$11,250 |
N/A |
|
Annual Limitation on Compensation |
$360,000 |
$350,000 |
$345,000 |
|
Defined Contribution Limitation |
$72,000 |
$70,000 |
$69,000 |
|
Defined Benefit Limitation |
$290,000 |
$280,000 |
$275,000 |
|
Highly Compensated Employee Compensation Threshold |
$160,000 |
$160,000 |
$155,000 |
|
Mandatory Roth Catch-up Threshold (SS Wages) |
$150,000 |
N/A |
N/A |
|
Key Employee Compensation - Officer Threshold |
$235,000 |
$230,000 |
$220,000 |
|
SIMPLE Deduction |
$17,000 |
$16,500 |
$16,000 |
|
SIMPLE Catch-Up Contribution |
$4,000 |
$3,500 |
$3,500 |
|
IRA Contribution Limit |
$7,500 |
$7,000 |
$7,000 |
|
IRA Catch-Up Contribution Limit |
$1,100 |
$1,000 |
$1,000 |
|
Social Security Wage Base |
$184,500 |
$176,100 |
$168,600 |
Employee Benefits
Benefit programs should be a win-win for employers and employees. We strive to accomplish that goal in the design, implementation and operation of sophisticated benefit and executive compensation programs – qualified and non-qualified retirement programs and health and welfare plans. McDonald Hopkins' employee benefits team has a long track record of working to maximize the efficiency and economic feasibility of each program.
If you have any questions or would like more information, contact attorneys Jason Faust or John Wirtshafter.
