The U.S. Internal Revenue Service (IRS) on November 13 announced that the annual contribution limits for certain retirement plans will be higher in 2026. At Sky Transport Solutions, we understand how important it is for employers to stay informed about these changes that directly impact employee benefits and retirement planning.
Increased Employee Contribution Limits
The annual contribution limit for employees participating in what the IRS calls "qualified defined contribution" plans, such as 401(k) and 403(b) plans, will increase to $24,500. This is up from $23,500 in 2025. The IRS calls the $1,000 bump a "cost-of-living" adjustment.
Total Contribution Limits
The limit on total employer-plus-employee contributions to defined contribution plans will increase to $72,000 in 2026, up from $70,000 in 2025. This higher limit provides more flexibility for both employers and employees in planning retirement savings strategies.
Catch-Up Contribution Limits
The catch-up contribution limit for employees aged 50 and older who are enrolled in qualified retirement plans will increase to $8,000 from $7,500. However, the super catch-up contribution provision in the SECURE 2.0 Act of 2022, which took effect in 2025, is still in effect. This allows those between the ages of 60 through 63 to contribute $11,250 instead of $8,000 in 2026, unchanged from last year.
Understanding Catch-Up Contributions
A catch-up contribution is an added amount that employees aged 50 or older can contribute to their plan beyond the standard annual contribution limit. This helps older workers "catch up" on retirement savings as they approach retirement age.
Sky Transport Solutions recommends that employers clearly communicate these catch-up contribution options to eligible employees, as they can significantly impact retirement readiness.
Communication Recommendations for Employers
Employers should share this information with employees of all ages to help them plan financially for the upcoming year, and for the years ahead. This could be done at the same time other benefits information is communicated, since many employers are in the middle of their open enrollment periods. These new IRS limits could also be announced in separate employee communication methods, such as posting fliers around work or on the company intranet.
Key Takeaway from Sky Transport Solutions
The IRS increased the amounts employees can contribute to retirement savings accounts in 2026. This information should be shared with employees to help them plan their financial futures. Sky Transport Solutions encourages employers to proactively communicate these changes to ensure employees can take full advantage of the increased contribution limits.
How Sky Transport Solutions Can Help
At Sky Transport Solutions, we specialize in helping businesses navigate complex compliance requirements, including employee benefits and retirement plan administration. Our experienced team can assist your business with:
- Understanding the new 2026 retirement contribution limits
- Developing effective communication strategies to inform employees about these changes
- Ensuring compliance with IRS regulations for retirement plans
- Integrating these updates into your existing benefits administration processes
- Providing guidance on how to maximize employee engagement with retirement planning
Staying informed about retirement plan contribution limits is essential for both employers and employees. Sky Transport Solutions is here to help you navigate these changes and ensure your organization remains compliant while supporting your employees' financial futures.
Sky Transport Solutions provides comprehensive compliance support for businesses nationwide. Stay informed about critical regulatory changes that impact your business operations and employee benefits.