Starting January 1, 2026, 401(k) contribution limits jump to $24,500, with catch-up contributions rising to $8,000 for those 50+. Workers aged 60-63 can add another $11,250 under SECURE Act 2.0, reaching $35,750 total. Employers need to update payroll systems and alert employees to avoid missed savings.
The IRS recently came out with their 2026 retirement plan contribution limits. If your employees don't know about it, they could be missing out on huge tax-advantaged savings. Here's what's changed. Starting January 1st, employees can contribute up to $24,500 into their 401. That's a $1,000 increase from last year. For employees that are age 50 or older, the catch-up contribution limit also went up from $7,500 to $8,000, bringing their total potential contribution to $32,500 per year. There's also a special catch-up provision introduced by SECURE Act 2.0 for employees between the ages of 60 and 63. That limit stays at $11,250, meaning these employees could potentially contribute up to $35,750 in 2026. On the IRA side, the annual contribution limit increase is up to $7,500, up from $7,000, with a catch-up limit of $1,100 for those 50 and older. Why does this matter? What does this mean to you? Few reasons. First, if your company offers any kind of employer match, make sure your payroll system and plan documents are aligned with the new limits. You don't want contributions getting capped prematurely or calculated against outdated numbers. It's a huge headache in the background. Second, this is a great opportunity to communicate the update to employees. Higher limits means more room for tax-advantaged savings, and a lot of employees simply don't know these numbers have changed. Quick email or benefits reminder can go a long way. And third, if you have employees in that 60 to 63 range, make sure they know about the enhanced catch-up provision. It's one of the most underutilized benefits out there. So what do we do now? Talk to your 401 plan admin, confirm your plan reflects the 2026 limits, update any benefit materials that reference contribution maximums, and push a quick communication out to your team. Especially anyone approaching that retirement age who wants to maximize their contributions this year. That's your 2026 retirement plan limit update. If you have any questions about how these changes affect your benefits setup or payroll configuration, reach out to us here at Guru. We're happy to help. Like and subscribe for more HR and payroll updates, and we'll see you in the next one.
