Understanding your 401(k): How it works and why it matters.
What is a 401(k) plan? Key benefits and how to maximize your savings.
The IRS said Americans who are saving for retirement have the opportunity to save even more before taxes in 2026.
Next year, the annual deferral limit for employees will increase from $23,500 in 2025 to $24,500 for workplace plans, including 401(k)s, 403(b)s, government 457 plans, and federal thrift savings plans.
Additional contributions for participants age 50 and older will increase from $7,500 to $8,000, capping total contributions in 2026 at $32,500. For employees aged 60, 61, 62 and 63 who participate in these plans, the super catch-up contribution limit remains $11,250, rather than the usual catch-up contribution of $8,000.
Only 14% of participants saved the maximum amount to qualify for the tax break in 2024, flat from 2023, according to Vanguard’s annual report, How America Saves. However, the proportion of older participants who were eligible for and made catch-up contributions gradually increased from 15% to 16%, the report said. Super catch-up contributions did not start until 2025.
Reminder about catch-up contributions for high earners
Richard Pong, a San Francisco-based certified public accountant, reminded that 2026 catch-up contributions for those who earned at least $160,000 in the previous calendar year must be made into a Roth plan or as an after-tax catch-up contribution. But employer plans don’t have to offer catch-up contributions or a Roth plan, he said.
Employers without Roth plans “may instead prohibit higher-paid participants from making catch-up contributions,” he said.
What are the IRA limits for 2026?
In 2026, the annual contribution limit to an IRA will increase from $500 to $7,500. The IRS says the IRA catch-up contribution limit for individuals age 50 will increase from $1,000 to $1,100 in 2025, subject to cost-of-living adjustments.
Have the income ranges for contributions to traditional and Roth IRAs changed?
Yes, the IRS says your income range will determine your eligibility to make deductible contributions to a traditional IRA, contributions to a Roth IRA, and to claim an increased Saver’s Credit in 2026.
The scope of the 2026 phase-out is:
- For single taxpayers eligible for workplace retirement plans, the phaseout range increased from $79,000 to $89,000 in 2025 and from $81,000 to $91,000.
- For married couples filing jointly, the phaseout range increases from $126,000 to $146,000 in 2025 and from $129,000 to $149,000 in 2025 if the spouse making the IRA contribution is in a workplace retirement plan.
- For IRA contributors who are not eligible for a workplace retirement plan and are married to the eligible individual, the 2025 phaseout range is between $236,000 and $246,000 and $242,000 to $252,000.
- For married people covered by a workplace retirement plan who file a separate return, the phaseout range remains within the $0 to $10,000 range, not subject to annual cost-of-living adjustments.
- For married people covered by a workplace retirement plan who file a separate return, the phaseout range remains within the $0 to $10,000 range, not subject to annual cost-of-living adjustments.
- The income phase-out range for taxpayers contributing to a Roth IRA increases from between $150,000 and $165,000 to between $153,000 and $168,000 for singles and heads of households. For married couples filing jointly, the graduated deduction range increased from $236,000 to $246,000 to $242,000 to $252,000. The phaseout range for married people who contribute to a Roth IRA and file a separate return is not subject to annual cost-of-living adjustments and remains within the $0 to $10,000 range.
- The income limit for the Savers Credit for low- and moderate-income workers is $80,500 for married couples filing jointly, up from $79,000 in 2025. $60,375 for heads of household, up from $59,250 in 2025. Singles and married people filing separately will pay $40,250, up from $39,500 in 2025.
Medora Lee is USA TODAY’s money, markets and personal finance reporter. Please contact us at mjlee@usatoday.com. Subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
