2026 401(k) and IRA Limits Are Higher: Is Your Paycheck Set Up to Use Them?
The IRS raised retirement contribution limits for 2026. If your paycheck deductions are still set at last year\'s amount, you may be leaving tax savings on the table.
The IRS has raised retirement savings limits for 2026. If you have not updated your contribution elections yet, now is the time — workplace plan contributions come out of your paycheck, and the year is running out.
New Contribution Limits
Employees in 401(k), 403(b), governmental 457 plans, and the federal Thrift Savings Plan can contribute up to $24,500 for 2026, up from $23,500 for 2025. The annual IRA contribution limit rises to $7,500, up from $7,000.
Catch-Up Contributions
If you are 50 or older, you can put in more. The catch-up limit for most workplace plans rises to $8,000, which means savers 50 and older can contribute up to $32,500 in 2026. The IRA catch-up limit rises to $1,100.
A separate, higher catch-up amount for workers ages 60 to 63 remains at $11,250 for 2026 — a provision introduced in recent legislation to help those closest to retirement accelerate their savings.
Why It Matters Now
Workplace plan contributions generally come out of your paycheck, so the time to adjust is before the year runs out. If your contributions are still set at last year's amount, you may not reach the new limit. For many Bay Area households in higher brackets, pre-tax contributions can meaningfully lower taxable income.
Log in to your employer's benefits portal and check your current deferral percentage or dollar amount. A small adjustment now can add up before December 31.
Other Year-End Retirement Moves
Fall is also a good time to think about:
- Roth conversions — if your income is lower than usual this year, converting some traditional IRA funds to a Roth can lock in today's tax rate
- Required minimum distributions (RMDs) — if you are retired and subject to RMDs, these must be taken by December 31 to avoid a penalty
- Traditional vs. Roth contributions — the right choice depends on your income, your bracket now, and what you expect in future years
These decisions depend on your full financial picture. A quick review before year-end can help you make the most of the 2026 limits.
Source: IRS, IR-2025-111, "401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500," and IRS Notice 2025-67 — irs.gov/newsroom
This article is for general information only and is not tax advice. Contact Bay Tax Services at (408) 378-9303 to discuss your situation.
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