14 November 2025 • 21 minute read
IRS announces 2026 retirement and benefit plan limits, SSA announces COLA adjustment
On November 13, 2025, the Internal Revenue Service (IRS) announced cost-of-living adjustments (COLAs) to the dollar limits on benefits and contributions in retirement plans for 2026. These adjustments are in addition to previously announced increases in limits to other employee benefit plans. In addition, the Social Security Administration (SSA) recently announced the COLA to the Social Security wage base for 2026.
The updated limits for 2026, as compared to last year’s limits, are set forth in the charts below.
| Qualified retirement plan contribution limits | 2025 | 2026 |
|---|---|---|
| Section 401(k) and 403(b) plan elective deferral limit (Code Section: 402(g)(1)) |
$23,500 | $24,500 |
| Catch-up contribution limit (for participants aged 50 or older) (Code Section: 414(v)(2)(B)(i)) |
$7,500 | $8,000 |
| Catch-up contribution limit ("super" catch-up for participants aged 60-63) (Code Section: 414(v)(2)(E)(i)) |
$11,250 | $11,250 |
| Wage threshold for Roth-only catch-up contributions (beginning in 2026) (Code Section: 414(v)(7)(A)) |
$145,000 | $150,000 |
| Annual compensation limit (Code Sections: 401(a)(17), 401(l), 408(k)(3)(C), and 408(k)(6)(D)(ii)) |
$350,000 | $360,000 |
| Defined contribution plans – annual additions limit (Code Section: 415(c)(1)(A)) |
$70,000 | $72,000 |
| Defined benefit plans – maximum annual benefit (Code Section: 415(b)(1)(A)) |
$280,000 | $290,000 |
| Annual distribution dollar amount used to determine the five-year employee stock ownership plan (ESOP) distribution limit (Code Section: 409(o)(1)(C)(ii)) |
$280,000 | $290,000 |
| ESOP limit for determining the maximum account balance subject to the five-year distribution limit (Code Section: 409(o)(1)(C)(ii)) |
$1,415,000 | $1,455,000 |
| Other limits | 2025 | 2026 |
|
Highly compensated employee compensation threshold |
$160,000 | $160,000 |
|
Key employee compensation threshold |
$230,000 | $235,000 |
| Section 457 plan elective deferral limit – deferred compensation plans of state and local governments and tax-exempt organizations (Code Section: 457(e)(15)) |
$23,500 | $24,500 |
| Pension-linked emergency savings accounts (PLESAs) limit (Code Section: 402A(e)(3)(A)(i)) |
$2,500 | $2,600 |
| SIMPLE plans | 2025 | 2026 |
| Maximum contributions (Code Section: 408(p)(2)(E)) |
$16,500 | $17,000 |
| Catch-up contributions (for participants aged 50 or older) (Code Section: 414(v)(2)(B)(ii)) |
$3,500 |
$4,000 |
The SSA announced the cost-of-living adjustment to the Social Security contribution and benefit base (also known as the “taxable wage base”) for 2026.
| Social Security taxable wage base | 2025 | 2026 |
|---|---|---|
| Social Security taxable wage base | $176,100 | $184,500 |
Note: Federal Insurance Contributions Act (FICA) tax rates remain unchanged. The Old-Age, Survivors, and Disability Insurance (OASDI) tax of 6.20 percent each for employers and employees (12.4 percent for self-employed individuals) applies to wages up to the Social Security annual taxable wage base. The Medicare tax of 1.45 percent each for employers and employees is not limited to the taxable wage base and applies to all wages. An additional Medicare tax of 0.9 percent for employees only applies to all wages over specified income thresholds based on filing status ($250,000 for married filing jointly, $125,000 for married filing separately, and $200,000 for all other taxpayers).
The health savings account (HSA) and high-deductible health plan (HDHP) limits are as follows:
| HSA/HDHP limits | 2025 | 2026 |
|---|---|---|
| HSA maximum health savings account contribution |
Self: $4,300 Family: $8,550 |
Self: $4,400 Family: $8,750 |
| HSA catch-up contribution (for participants aged 55 or older) | $1,000 | $1,000 |
| HDHP minimum annual deductible |
Self: $1,650 Family: $3,300 |
Self: $1,700 Family: $3,400 |
| HDHP maximum out of pocket |
Self: $8,300 Family: $16,600 |
Self: $8,500 Family: $17,000 |
The flexible spending account (FSA) limits are as follows:
| FSA limits | 2025 | 2026 |
|---|---|---|
| Health FSA |
$3,300 Maximum carryover to following plan year: $660 |
$3,400 Maximum carryover to following plan year: $680 |
| Dependent care FSA |
Family: $5,000** Married, filing separately: $2,500 |
Family: $7,500** Married, filing separately: $3,750 |
| **Married and filing a joint return or single parent filing | ||
Excepted benefit health reimbursement arrangement (EBHRA)
| Arrangements | 2025 | 2026 |
|---|---|---|
| EBHRAs | $2,150 | $2,200 |
Transit and parking fringe benefits limit
| Transit and parking fringe benefits limit | 2025 | 2026 |
|---|---|---|
| Transit/parking | $325/month | $340/month |
Action items for employers
Employers are encouraged to:
- Update any plan documents that identify the annual limitations.
- Update participant communications, as the limits may impact important benefit elections for 2026.
- Update Human Resource Information Systems (HRIS) and/or payroll systems with new limitations for administration, recordkeeping, and tax reporting.
- Ensure all vendor data feeds are updated to comply with the new limits.
For more information, please contact any of the members of our Employee Benefits and Executive Compensation group.