IRS Hikes 2026 401(k) Contribution Limit—Find Out the New Maximum & How to Take Advantage

The IRS has officially lifted the 401(k) employee-deferral ceiling to $24,500 for tax year 2026, a $1,000 jump from the 2025 threshold. Savers age 50 and older may invest an additional $8,000, while workers aged 60-63 can still make the special Secure 2.0 catch-up of $11,250, keeping their total elective contribution potential as high as $35,750 next year. Why the bump matters • Bigger pre-tax or Roth deferrals mean more room to lower adjusted gross income or boost tax-free growth. • Annual limit increases generally track inflation; 2026 marks the third straight year of a $1,000 raise. • Higher caps can cushion portfolios against market volatility by allowing greater dollar-cost averaging. How to hit the $24,500 target 1. Re-set payroll percentages in January. Dividing $24,500 by 26 bi-weekly paychecks equals roughly $942 per pay period. 2. Front-load contributions if employer matches each check instead of annually; you avoid “match shortfall” later. 3. Use Roth 401(k) for the portion you expect to withdraw in a higher-tax retirement bracket. Strategies for 50-plus savers • Layer the $8,000 standard catch-up first, then evaluate whether the $11,250 Secure 2.0 supersized catch-up (ages 60-63) fits cash-flow needs. • High earners exceeding $145,000 in prior-year wages must route catch-ups into Roth by law starting 2026; confirm plan amendments early. Coordination with employer money The combined employee-plus-employer 2026 limit is projected at $76,500, preserving maximum space for profit-sharing deposits or safe-harbor matches. Monitor year-end true-ups so company dollars don’t push total contributions above this ceiling. IRA and HSA interplay If you already max the 401(k), funnel extra cash to the 2026 IRA limit ($7,500, plus $1,000 catch-up) or the HSA limit ($4,300 self-only, $8,600 family, with $1,000 catch-up), both also adjusted for inflation. Action checklist before December 31 2025 • Update deferral elections during open enrollment. • Verify W-2 income projection to ensure Roth catch-up compliance. • Rebalance asset allocation after new contributions hit to maintain target risk levels. Bottom line The new $24,500 401(k) contribution limit—and expanded catch-up allowances—give every worker a bigger tax-advantaged bucket in 2026. Adjust pay-period percentages now, coordinate with employer matches, and take full advantage of the IRS inflation hike to keep retirement goals on schedule.