2025 & 2026 Maximum 401(k) Contribution Limits

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2025–2026 401(k) Contribution Limits: What You Need to Know

Saving for retirement is one of the most important financial goals, and a 401(k) plan can be a powerful tool to help you get there. Each year, the IRS adjusts contribution limits to reflect inflation and economic changes, which can impact how much you’re able to set aside. Understanding the latest limits—and how they apply to your situation—can help you maximize your savings and avoid costly mistakes.

How 401(k) Contribution Limits Work in 2025 and 2026

The IRS updates the maximum 401(k) contribution limits each year. A 401(k) is an employer-sponsored, tax-deferred plan that allows employees to invest a portion of their paychecks, subject to annual IRS limits.

The IRS raises 401(k) contribution limits annually to keep pace with inflation. Exceeding these limits can result in penalties if not corrected.

2025 & 2026 Maximum 401(k) Contribution Limits

For 2026,

• The maximum 401(k) contribution limit has been raised to $24,500, a $1,000 increase from the $23,500 limit set in 2025.
• The catch-up contribution for individuals aged 50 and above has been raised to $8,000 in 2026 from $7,500 in 2025.
• For employees aged 60 to 63, the catch-up contribution remains unchanged from 2025 at $11,250.
• The maximum contribution limit for the employer and the employee in 2026 cannot exceed $72,000 ($80,000 if you are 50 or older and $83,250 if you are aged 60 to 63), or 100% of the employee's compensation, whichever is less.
• This is an increase of $2,000 from 2025, when the maximum contribution limit for the employer and employee could not exceed $70,000 ($77,500 for those aged 50 and up) or 100% of an employee’s compensation, whichever is less.
• Employers match employee contributions as either a percentage of pay or on a dollar-for-dollar basis.

Employer contributions do not count toward an employee’s annual contribution cap, as long as total account contributions stay within the set limits.

Employer-matched contributions offer employees additional value if they stay with the company long term.

Roth 401(k) Contribution Limits:

The contribution limit for a Roth 401(k) is similar to that for a traditional 401(k). Where you have access to both, you can contribute to each, provided the total contribution remains within the $24,500 limit in 2026. Contributions made to the IRA and other retirement plans will not impact the prescribed limit.

After-tax 401(k) Contribution Limits:

You may make after-tax contributions once you reach your personal limit, provided the combined employee and employer contributions have not reached the maximum.

After-tax 401(k) contributions are amounts employees can invest in their plan after meeting their Roth limits.

401(k) Contribution Limits for Highly Compensated Employees

The IRS defines highly compensated employees (HCEs) as those who meet either the ownership or compensation criteria.

• Ownership test: A person owning more than 5% of a company, regardless of their earnings.
• Compensation test: A person is in the company’s top 20% of pay and earns over a specified compensation. The amount is $160,000 in 2025 and 2026.

The IRS requires non-discrimination testing for all 401(k) plans to ensure that the HCEs do not benefit disproportionately from the non-HCEs. The tests are:

• ACP (Actual Contribution Percentage) Test: It focuses on employer matching and after-tax 401(k) contributions.
• ADP (Actual Deferral Percentage) Test: It compares the salary deferral rates between two groups.

If HCEs contribute excessively to a company's 401(k) plan, the IRS may reduce their limits and require employers to return excess contributions.

Exceeding the 401(k) Limit by Mistake:

Where the mistake was caught before tax filing:

The employee may correct the mistake by notifying the plan administrator, who will return the excess amount and file a 1099-R for the year the excess was distributed.

Where the mistake was not caught before the deadline:

The employee may need to pay taxes twice the amount in the year:

• The contribution was made.
• It was distributed.

What's Next?

Now that you know the 2025 and 2026 401(k) contribution limits, the next step is making a plan to take full advantage of them. Review your current contributions, adjust your payroll deferrals if needed, and consider increasing your savings—especially if you’re eligible for catch-up contributions. Staying proactive can help you build a stronger retirement foundation while making the most of available tax advantages.

Get Started with a Retirement Specialist