Contributing Author: Kristine Custodio Suero, Advanced Certified Paralegal

Each year, the Internal Revenue Service (IRS) adjusts key contribution and benefit limits for qualified retirement plans to reflect cost-of-living increases and statutory changes. These updates affect how much employers and employees can contribute to, or accrue under, tax-qualified retirement plans.

IRS Notice 2025-67 provides the official 2026 limits for 401(k), 403(b), 457(b), and other qualified plans. Plan sponsors should review these changes now to ensure timely compliance and maximize savings opportunities for plan participants.

Key Retirement Plan Limit Categories

Below are the primary limits typically updated annually by the IRS:

• 401(k), 403(b), and 457(b) Elective Deferral Limits
  • The maximum employee pre-tax or Roth contributions permitted for the year.
• Annual Compensation Limit
  • The highest amount of compensation that may be considered when calculating plan benefits or contributions.
• Defined Contribution Plan Annual Addition Limit
  • The combined employee and employer contribution limit under Internal Revenue Code §415(c).
• Defined Benefit Plan Maximum Annual Benefit
  • The largest permissible annual benefit that may be paid under a defined benefit plan.
• Catch-Up Contributions
  • Additional deferrals available to participants age 50 or older. Under SECURE 2.0, expanded catch-up limits apply to participants ages 60–63 beginning in 2025.
• SIMPLE and SEP IRA Limits
  • Updated maximum deferral and employer contribution limits for simplified employer plans and SEP IRAs.
• Highly Compensated Employee (HCE) and Key Employee Thresholds
  • Adjusted compensation thresholds used in annual nondiscrimination and top-heavy testing

2026 Retirement Plan Limits

1. Elective Deferral Limits

•  401(k), 403(b), and 457(b) Plans: $24,500
• SIMPLE IRA and SIMPLE 401(k): $17,000
• Starter 401(k): $6,000

2. Catch-Up Contributions

• Age 50+ Catch-Up (401(k), 403(b), 457(b)): $8,000
• Age 60-63 Super Catch-Up (401(k), 403(b), 457(b)): $11,250
• SIMPLE IRA/401(k) Age 50+ Catch-Up: $4,000
• SIMPLE IRA/401(k) Age 60-63 Catch-Up: $5,250
• Starter 401(k) Catch-Up: $1,100

3. Defined Contribution and Defined Benefit Limits

• Annual Addition Limit (Defined Contribution): $72,000
• Maximum Annual Benefit (Defined Benefit): $290,000

4. Compensation and Employee Status Thresholds

• Annual Compensation Limit: $360,000
• Highly Compensated Employee (HCE): $160,000
• Key Employee (Officer): $235,000

5. IRA Limits

• IRA/Roth IRA Contribution Limit: $7,500
• IRA/Roth IRA Catch-Up Contribution: $1,100

6. SEP IRA

• Minimum Compensation for SEP Coverage: $800
• Maximum SEP Contribution: $72,000

Practical Implications for Plan Sponsors and Administrators

Plan sponsors should act early to ensure administrative readiness and legal compliance:

• Plan Amendments – Update plan documents and summary plan descriptions to incorporate the 2026 limits before year-end deadlines.
• Participant Communications – Provide timely notice to employees about new contribution limits, especially for salary-deferral plans such as 401(k) and SIMPLE IRA arrangements.
• Payroll Adjustments – Confirm that payroll systems reflect updated deferral and compensation caps to prevent excess contributions.
• Nondiscrimination Testing – Review the impact of new limits on testing for highly compensated and key employees.
• Catch-Up Opportunities – Remind eligible participants about increased catch-up deferrals, particularly for those nearing retirement.

Compliance Deadlines and IRS Requirements

• Annual Notices: Employers must distribute updated employee notices regarding contribution opportunities and plan limits.
• Plan Amendments: Amendments to reflect updated limits must generally be adopted by December 31, 2026, unless otherwise extended by future IRS guidance.
• Recordkeeping: Maintain documentation verifying that contributions, benefits, and testing reflect the updated thresholds.

How Schechter Benefits Law Group LLP Can Help

As trusted ERISA counsel, Schechter Benefits Law Group LLP advises employers, fiduciaries, and plan administrators on all aspects of qualified plan compliance—from plan design to counseling on administration and regulatory updates.

Our services include:

• Reviewing and amending plan documents to reflect new IRS limits
• Coordinating with third-party administrators and payroll providers to ensure compliance
• Advising on nondiscrimination testing, catch-up contributions, and SECURE 2.0 provisions
• Providing ongoing legal updates and compliance training for plan fiduciaries

Final Thoughts

IRS Notice 2025-67 reaffirms the importance of proactive plan management as contribution and benefit limits continue to evolve. Employers and plan sponsors should review their plan operations, participant communications, and administrative processes to remain compliant and support employees in achieving their retirement goals.

For guidance on updating your retirement plan or understanding how these changes affect your organization, contact Schechter Benefits Law Group for experienced, practical ERISA counsel.

*Nothing stated herein is to be construed as legal or tax advice and shall not form any attorney-client relationship. Each individual situation is unique. Please contact us and speak with one of our attorneys regarding your individual situation.