- The IRS has announced higher 401(k) contribution limits for 2026.
- Starting in 2026, employees can defer $24,500 into workplace plans, up from $23,500 in 2025.
- Only 14% of participants maxed out 401(k) plans in 2024, according to Vanguard’s 2025 How America Saves report.
The IRS has announced new 401(k) contribution limits for 2026.
In its release Thursday, the agency increased the employee deferral limit to $24,500 next year, up from $23,500 in 2025. The change applies to 401(k)s, 403(b)s and most 457 plans, along with the federal Thrift Savings Plan.
The IRS also unveiled 2026 catch-up contribution limits for savers age 50 and older, new individual retirement account savings limits and higher income thresholds for Roth IRA contributions.
Starting in 2026, the 401(k) catch-up contribution limit will rise to $8,000 for savers 50 and older, from $7,500 in 2025. But investors aged 60 to 63 can instead save an extra $11,250, based on changes enacted via Secure 2.0. That figure is unchanged from 2025.
Both amounts are in addition to the $24,500 deferral limit for 2026.
In 2024, only 14% of participants maxed out their 401(k)s, according to Vanguard’s 2025 How America Saves report, which was based on more than 1,400 qualified plans and nearly 5 million participants. The average combined savings rate, including employer deposits, was an estimated 12%, according to the same report.
A separate report found the average 401(k) savings rate, including employee and employer contributions, was a combined 14.2% during the second quarter of 2025, according to a Fidelity Investments analysis of more than 25,000 corporate plans and 24.6 million participants.
The IRS announcement comes hours after President Donald Trump signed into law a funding bill to end the longest federal government shutdown in U.S. history. It also comes roughly a month after the agency released dozens of inflation adjustments for 2026, including federal income tax brackets, higher capital gains brackets and provisions impacting families, among others.
