BizTech Law Blog
This blog has been updated since November 7, 2024. The data below is current.
The IRS has announced the 2026 cost-of-living adjustments for retirement plan and health and welfare benefit plan limitations. The charts below set forth the applicable limitations for 2026 relative to the 2025 limitations.
Retirement Plans
The chart below represents some of the important changes the IRS has made to limitation requirements for retirement plans. The changed limitations are between the 2025 limits and the 2026 limits. If you would like to review a complete explanation of all limitation changes made to retirement plans, please see this notice published by the IRS: IRS Notice 2025-67
|
Retirement Plan Limitation |
2025 Limit |
2026 Limits |
|
401(k) and 403(b) Employee Contribution Limit |
$23,500 |
$24,500 |
|
"Catch-Up Contribution" Limit (age 50 and older) |
$7,500 |
$8,000 |
|
Defined Contribution Maximum Contribution |
$70,000 |
$72,000 |
|
Annual IRA Contributions |
$7,000 |
$7,500 |
|
Defined Benefit Annual Benefit Limit |
$280,000 |
$290,000 |
|
Highly Compensated Employee Compensation |
$160,000 |
$160,000 |
|
Top-Heavy Key Employee Officer Dollar Limit |
$230,000 |
$235,000 |
|
Annual Compensation Limit |
$350,000 |
$360,000 |
|
457(b) Plan Contribution Limit |
$23,500 |
$24,500 |
|
Social Security Taxable Wage Base |
$176,100 |
$184,500 |
The IRS has also made changes to the limitation requirements for health and welfare benefit plans for 2026. If you would like to review a complete explanation of all limitation changes made to health and welfare benefit plans, please see these notices published by the IRS: Rev. Proc. 2025-19 and 26 CFR 601.602: Tax forms and instructions.
Health and Welfare Benefit Plans
|
Health and Welfare Benefit Plan Limitation |
2025 Limit |
2026 Limit |
|
Health Flexible Spending Account (FSA) Contribution Limit |
$3,300 |
$3,400 |
|
HSA Annual Deduction Minimums |
|
|
|
HSA Out-of-Pocket Maximums |
|
|
|
Qualified Transportation Fringe Benefit Monthly Limits |
|
|
One notable increase is the change to dependent care assistance programs (“DCAP”). The last increase to DCAP was in 1986 when it was raised to $5,000. The $5,000 limit remained until now – the new limit for 2026 is $7,500.
If you have questions related to these limits or how they affect the administration of your plan, please contact one of the authors of this article.
- Amanda Dernovshek...517.371.8259...adernovshek@fosterswift.com
- Julie Hamlet...616.796.2515...jhamlet@fosterswift.com
- Mindi Johnson...616.726.2252...mjohnson@fosterswift.com
- Olivia Reid...517.371.8371...oreid@fostertswift.com
ShareholderAmanda Dernovshek is an employee benefits attorney in our Business and Tax group. Her practice focuses on issues related to employee stock ownership plans (ESOPs), non-qualified deferred compensation plans, qualified ...
ShareholderJulie is an experienced attorney with over a decade of practice focused on employee benefits and retirement plan compliance. She advises employers, plan sponsors, and fiduciaries on the design, operation, and governance of ...
ShareholderWith a business-minded approach, and service-oriented delivery, Mindi helps clients navigate challenges and solve problems in the areas of employee benefits law and health care law. Mindi has spoken and written extensively on ...
AssociateOlivia Reid is an associate with the Business & Tax practice group in the Lansing office. She assists clients with entity formation, non-profits, corporate governance, employee benefits, business & succession planning ...
