What the New IRS 401(k) and IRA Limits Mean for You

Quick Read

• IRA contribution limits are rising to $7,500 for savers under 50 and $8,600 for those 50 and over.

• 401(k) limits are increasing to $24,500 for savers under 50 and $32,500 for those 50 and over.

• There are new rules for higher earners who want to make catch-up contributions to their 401(k)s.

• If you’re thinking about retiring or know someone who is, there are three quick questions causing many Americans to realize they can retire earlier than expected. take 5 minutes to learn more here

There's a reason it pays to save for retirement in an IRA or 401(k). These accounts give you a tax break on your money, whereas a regular brokerage account won't.

With a traditional IRA or 401(k), your money goes in on a pre-tax basis, and gains are tax-deferred. That means you don't pay taxes until you take withdrawals.

With a Roth IRA or 401(k), your money goes in on an after-tax basis, but gains and withdrawals are tax-free.

Many people struggle to save for retirement and find it difficult to contribute even a few hundred dollars a month to an IRA or 401(k). But then there are people who max out these accounts every year and wish they could save more.

If you fall into the latter camp, here's some good news. Both IRA and 401(k) limits are rising in 2026. Here's what the new rules entail.

How IRA limits are rising in 2025

In 2025, IRA contributions max out at $7,000 for workers under age 50 and $8,000 for workers ages 50 and older. In 2026, savers under 50 will be able to contribute up to $7,500 to an IRA, while those 50 and over will be able to contribute up to $8,600.

You may notice that for the first time in years, the catch-up contribution limit for IRAs has increased from $1,000 to $1,100. That gives older savers even more opportunity to fund an IRA and enjoy the tax breaks that come with it.

How 401(k) limits are rising in 2025

In 2025, savers under 50 can contribute up to $23,500 to a 401(k), while those 50 and over can contribute up to $31,000. These limits are rising in 2026, but the rules are also changing.

In 2026, savers under 50 can contribute up to $24,500 to their 401(k)s, while those 50 and over can contribute up to $32,500.

Savers ages 60 to 63 can also make a catch-up contribution of $11,250 in 2026 instead of the general $8,000 catch-up that applies to older workers. So all told, people in this age group can contribute up to $35,750 to a 401(k) in 2026.

That said, if you're eligible for catch-up contributions and are a higher earner, there's a new rule you'll need to follow.

If you have an income of more than $145,000, any catch-up contribution you make to a 401(k) plan has to be a Roth. If you're between ages 60 and 63 and eligible for the larger catch-up, that, too, has to be a Roth.

The good news is that many 401(k) plans offer a Roth savings component. If your employer's plan doesn't, however, then you may be barred from making catch-up contributions as a higher earner.

Don’t stress if maxing out isn’t in the cards

The reality is that many people cannot afford to max out an IRA, let alone a 401(k). But if you happen to be a strong saver, it's important to know how much money you're eligible to contribute to one of these accounts in the new year.

If maxing out isn't possible for you in 2026, don't sweat it. Instead, focus on ways to boost your savings rate slowly but surely.

Cutting a small expense might free up an extra $50 a month for your 401(k). Banking your 2026 raise might add another $200 a month on top of that. And working a side job could help you boost your savings rate substantially.

Remember, too, that if you're fairly new to the workforce, your wages may only allow you to contribute so much to a retirement plan. You're not doomed if you don't manage to max out an IRA or 401(k) in your 20s. What you should do, though, is aim to increase your savings rate as your earnings pick up.

Most importantly, be consistent in funding an IRA or 401(k). Save in one of these accounts every month, and hold your investments for a long period of time. With any luck, you'll manage to accumulate a nice amount of savings by the time your career comes to a close.

The New Report Shaking Up Retirement Plans 

You may think retirement is about picking the best stocks or ETFs, but you’d be wrong. See even great investments can be a liability in retirement. The difference comes down to a simple: accumulation vs distribution. The difference is causing millions to rethink their plans.

The good news? After answering three quick questions many Americans are finding they can retire earlier than expected. If you’re thinking about retiring or know someone who is, take 5 minutes to learn more here.