Seyfarth Synopsis: The IRS is back to work and just announced the 2026 annual limits that will apply to tax-qualified retirement plans. But wait, there’s more – a surprise increase in the inaugural FICA wage limit for purposes of the mandatory Roth catch-up requirement.  Employers maintaining tax-qualified retirement plans will need to make sure their plans’ administrative procedures are adjusted accordingly.

In Notice 2025-67, the IRS announced the various limits that apply to tax-qualified retirement plans in 2026. The “regular” contribution limit for employees who participate in 401(k), 403(b) and most 457 plans will increase from $23,500 to $24,500 in 2026. The “catch-up” contribution limit for individuals who are or will be age 50 by the end of 2026 is increased from $7,500 to $8,000. 

However, the “super” catch-up contribution limit for individuals aged 60 to 63 on December 31, 2026, remains $11,250. Some were expecting that limit to be indexed to 150% of the regular catch-up limit. However, the Internal Revenue Code provides that the limit is the greater of $10,000 or 150% of the 2024 catch-up limit (i.e., $7,500). As a result, the “super” catch-up contribution limit remains $11,250 for 2026, and the $11,250 limit may be indexed for inflation in future years. 

These same limitations apply if you work for a governmental or tax-exempt employer and participate in a 403(b) plan.

Beginning in 2026, “high-earners” (i.e., those who earned more than a certain amount in FICA wages from their employer in the prior calendar year), must make catch-up contributions on a Roth basis. In a surprise move, the Notice increases the inaugural FICA wage limit threshold from $145,000 to $150,000, meaning that for the 2026 calendar year, the mandate will apply those making in excess of $150,000 in FICA tax wages in 2025. Many practitioners believed the limit would stay at the statutory starting point of $145,000 for the first year given the lack of any indication about a possible increase from the IRS, including in the recent final regulations. 

The maximum that may be contributed to a defined contribution plan (e.g., 401(k) or 403(b) plan), inclusive of both employee and employer contributions, will increase from $70,000 to $72,000 in 2026. For individuals investing in individual retirement accounts (IRAs), the annual contribution limit will increase from $7,000 to $7,500 for 2026 (for those who are catch-up eligible, the limit will increase from $8,000 to $8,600 for 2026).

The Notice also includes several other notable retirement-related limitation changes for 2026. The maximum annual compensation that may be taken into account under a qualified retirement plan will increase from $350,000 to $360,000 for 2026. The dollar limitation on the annual benefit under a defined benefit plan will increase from $280,000 to $290,000, and the dollar limit used when defining a key employee in a top-heavy plan will increase from $230,000 to $235,000. The dollar limit used to determine a highly compensated employee remains $160,000.

Given the numerous changes, employers who sponsor a tax-qualified retirement plan should consider any necessary adjustments to plan administrative procedures and update their participant notices to ensure proper administration of the plan in 2026.