2026 Cost of Living Adjustments for Retirement Plans
The Internal Revenue Service recently announced its cost-of-living adjustments applicable to dollar limitations on benefits and contributions for retirement plans generally effective for Tax Year 2026 (see IRS Notice 2025-67 ). Most notably, the limitation on annual salary deferrals into a 401(k) or 403(b) plan will increase to $24,500, and the dollar threshold for highly compensated employees will increase to $160,000 . The more significant dollar limits for 2026 are as follows: LIMIT 2025 2026 401(k)/403(b) Elective Deferral Limit (IRC § 402(g)) The annual limit on an employee’s elective deferrals to a 401(k) or 403(b) plan made through salary reduction. $23,500 $24,500 Government/Tax Exempt Deferral Limit (IRC § 457(e)(15)) The annual limit on an employee’s elective deferrals concerning Section 457 deferred compensation plans of state and local governments and tax-exempt organizations. $23,500 $24,500 401(k)/403(b)/457 Catch-up Limit (IRC § 4...