Greetings — Ary Rosenbaum here, gear-shifting through the ERISA/401(k) lane, rubber on the pavement, ready to take you for a ride into what’s ahead for 2026 retirement-plan contribution limits. Think of this as your pit-stop briefing before the Grand Prix. Grab your helmet. (Yes, we’ll drop a Rocky quote or two.)
1. What’s Changing: The Big Bumper of Numbers
We’ve all been watching the inflation ticker and, yes, the engine is revving for new limits in 2026. Based on projections:
· The annual deferral limit for 401(k) and similar qualified plans is expected to climb from $23,500 in 2025 to approximately $24,500 in 2026.
· The “catch-up” contribution for participants age 50+ is projected to increase from $7,500 to about $8,000 in 2026.
· For those age 60-63, the new “super catch-up” could reach around $12,000 in 2026.
· The total contribution limit (employee + employer) for defined contribution plans is projected to move from around $70,000 in 2025 to $72,000–$73,000 in 2026.
· Also starting in 2026, high-earning participants (those with wages above the threshold, roughly $145,000 based on prior years) will face a new rule: catch-up contributions must be Roth (after-tax) instead of pre-tax.
2. Why It Matters in the “Rosenbaum Lane”
If you’re running a plan, advising plan sponsors, or you’re the highly compensated executive who thinks you’re “letting the machine idle” — it’s time to shift gears.
· More room to grow: With higher limits, there’s more tax-advantaged savings potential — but also more complexity. Higher numbers don’t mean “set it and forget it.”
· The race for older drivers: If you’re in the 50+ lane (especially 60-63), the super catch-up is your turbo-boost. But with turbo comes monitoring — making sure your plan document allows it and your payroll system can handle it.
· High earners beware: If you’re over the wage threshold, your catch-ups shift into the Roth lane. That means no more immediate tax deferral, but the chance for tax-free growth. It changes your fuel strategy.
· Sponsor/document risk: For plan sponsors, the infrastructure must adjust — payroll systems, plan amendments, participant communications. Most plans will need to be amended by December 31, 2026, to accommodate the new Roth catch-up requirement.
As I always say: “Time is undefeated.” (Cue Rocky’s bell.) You don’t want to show up for the closed-pit stop at the last minute.
3. Key Actions for 2026 Prep
Here’s your pre-race checklist, Ary-style:
1. Check your deferral limits: Assume $24,500 for under-50s unless IRS finalizes something higher.
2. Communicate with eligible participants: Especially those 50+, 60-63, and high wage earners — let them know the bigger limit and the Roth shift.
3. Coordinate with payroll and recordkeepers: Make sure systems can segregate catch-up contributions, identify high-wage participants, and enforce the Roth requirement.
4. Plan document amendment: Verify that your document accommodates “super” and Roth catch-ups, and plan for amendment by the 2026 deadline.
5. Revise projections and modeling: High-end savers should model the impact of Roth vs. pre-tax for catch-up contributions — tax scenarios matter.
6. Educate sponsors and HCEs: Higher deferrals don’t mean automatic compliance; testing and design still matter.
7. Monitor the final IRS announcement: Official numbers usually come in the fall — be ready to implement quickly.
4. Some Cautions (Because I’ve Seen the Wrecks)
· Don’t assume full employer match: Just because limits go up doesn’t mean the employer match does.
· Roth isn’t always best: For some, especially in high-income years, paying tax now may not be ideal.
· Avoid TPA errors: Mis-applying the new catch-up rules can cause major administrative headaches.
· Plan amendments matter: If your document doesn’t permit the new catch-ups, you’ll be stuck in the pit lane.
· Watch look-back wages: The threshold is based on prior-year wages; misclassify, and you’ll spin out on penalties.
5. Final Take (Ary’s Mic Drop)
If you’re playing retirement-plan strategy like a kid in a bumper car, you’re doing it wrong. Think instead like a seasoned driver in the Indy 500: you’ve got to monitor your gauges, know the turn ahead, anticipate speed changes, and avoid the wall.
2026 is offering a slightly longer straightaway — higher deferral limits, bigger catch-ups, but also new curves: the Roth requirement for high earners and the plan amendment turn. You’ll want to shift now, not wait for the final lap.
So, draft your memos, update your plan language, flag your high earners, talk to your advisors, and — most importantly — tell your participants. The potential’s real, but you have to activate it.
Remember: “It’s not how hard you hit — it’s how hard you can get hit and keep moving forward.” When the retirement plan limits move, you want to be in prime condition, gloves off, ready to dance.
