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At Trident Retirement Services, LLC, we believe that collaborating with your advisors is key to maximizing your retirement savings. Together, we will explore contribution limits and develop tailored strategies that will help you secure a fulfilling and financially stable retirement.
Visit Notice 2025-67 , www.irs.gov/pub/irs-drop/n-25-27 which explains the changes published, November 13th, 2025, in more detail.
Common Questions About Retirement Contribution Limits
Understanding retirement contribution limits is crucial for maximizing your savings potential. Here, we address some of the most frequently asked questions to help you navigate these limits effectively.
What are the annual contribution limits for 401(k) plans?
For 2026, the maximum contribution limit for 401(k) plans is $24,500 for individuals under 50. Those aged 50 and above can contribute an additional $8,000 as a catch-up contribution, totaling $32,500.
What is an "Highly Compensated Employee" ?
A Highly Compensated Employee (HCE) is generally an employee who owns more than 5% of the business or earned above a certain compensation threshold in the prior year, as defined by the Internal Revenue Service. HCE status matters in retirement plans because it can affect contribution limits and nondiscrimination testing, helping ensure plans remain fair and balanced for all employees.
What is a catch-up contribution?
Catch-up contributions are additional contributions that individuals aged 50 and older can make to their retirement accounts. For 401(k) plans, this allows for an extra $7,500 contribution in 2023, on top of the standard limit.
What is an enhanced catch-up contribution?
An Enhanced Catch-Up Contribution is an additional retirement plan contribution available to participants ages 60 to 63 under the SECURE 2.0 Act, allowing them to save more during their peak earning years. It’s designed to help accelerate retirement savings beyond the standard age-50 catch-up limit, giving eligible employees a stronger final sprint toward retirement
Can I contribute to both a 401(k) and an IRA?
Yes, you can contribute to both a 401(k) and an IRA. However, the contribution limits for each account are separate. For IRAs, the limit is $6,500 for 2023, with an additional $1,000 catch-up contribution for those 50 and older.
What happens if I exceed the contribution limits?
If you exceed the contribution limits, you may face tax penalties. It's important to monitor your contributions closely and consult with a financial advisor to ensure compliance with IRS regulations.