7 Retirement Rule Changes to Know for 2026

As 2025 comes to its end and we begin our transition to 2026, one transition in the new year may be your retirement. Here are 7 retirement rule changes you need to know for 2026.

Most contribution and income limits for retirement accounts are subject to inflation adjustments, also known as cost-of-living adjustments. That’s why the account rules can change from year to year. 

The IRS has announced the following seven changes that will affect your 2026 tax return.

1. Higher base contribution limits for workplace plans.

Just about every year, the base contribution limit for workplace retirement plans goes up. So, it isn’t surprising to see an increase in 2026 for accounts such as 401(k)s, 403(b)s, 457s, and Thrift Savings Plans (TSPs) for federal government workers.

The current contribution limit of $23,500 will increase to $24,500 in 2026. That means you can save more for retirement, take advantage of any additional employer matching,  and cut your taxes. 

For instance, if you have a traditional retirement plan, your contributions are tax-deductible, reducing your tax liability in the current year. Your future withdrawals of traditional contributions and earnings will be included in your ordinary taxable income. Plus, if you’re under 59.5, withdrawals are not subject to an exclusion and are subject to an additional 10% early withdrawal penalty.

If you choose a Roth retirement plan, your contributions are non-deductible because you make them on an after-tax basis. However, withdrawals are entirely tax-free once you’re 59.5 and have owned the account for at least five years. 

Any early withdrawals of amounts not previously taxed, such as account earnings, are subject to a 10% early withdrawal penalty if you’re under 59.5. However, you can always withdraw your original Roth contributions tax and penalty-free.

2. Higher catch-up contribution limits for workplace plans.

If you participate in a workplace retirement plan–such as a 401(k), 403(b), 457, or TSP– and are over age 50, you can make additional contributions, known as catch-up contributions. The limit has been $7,500 for many years, but that will increase to $8,000 starting in 2026. 

Therefore, those 50 or older with a workplace retirement plan can contribute at least the base rate of $24,500, plus an additional catch-up contribution of $8,000, for a total of $32,500.

However, if you’re in an age range of 60, 61, 62, and 63, you can contribute more than a regular catch-up amount, up to $11,250.

In other words, those from 60 to 63 will be able to contribute $24,500, plus a super catch-up contribution of $11,250 (unchanged from 2025), for a total of $35,750 in 2026.

3. Higher base contribution limits for IRAs. 

Just as the base contribution limit for workplace retirement plans is going up, the limit for traditional and Roth individual retirement accounts (IRAs) will also increase. The current limit of $7,000 will become $7,500 in 2026. However, you must have at least that much earned income to max out an IRA.

With a traditional IRA, your contributions are tax-deductible, reducing your tax liability in the current year. Your future withdrawals of traditional contributions and earnings after age 59.5 will be included in your ordinary taxable income.

If you qualify for a Roth IRA (more about that in a moment), your contributions are non-deductible because you make them on an after-tax basis. However, Roth withdrawals are entirely tax-free once you’re 59.5 and have owned the account for at least five years.

4. Higher catch-up contribution limits for IRAs.

Just like with workplace retirement plans, those over 50 can make additional catch-up contributions to an IRA. While the limit is lower, it’s still good to see a small increase from $1,000 in 2025 to $1,100 in 2026. 

Therefore, if you’re over 50 and have qualifying income, you can contribute $7,500 plus $1,100 to an IRA, for a total of $8,600 in 2026. This limit applies to both traditional and Roth IRAs. For example, if you’re over 50, you could contribute $4,000 to a traditional IRA and $4,600 to a Roth IRA to meet the annual maximum. 

5. Higher income limits for Roth IRA eligibility.

The Roth IRA is the only retirement account that disallows contributions for high earners. However, the income thresholds for Roth IRA contributions are going up in 2026 as follows by tax filing status:

• Singles with modified adjusted gross income (MAGI) above $168,000 (up from $165,000 in 2025) are ineligible.
• Heads of household with MAGI above $168,000 (up from $165,000 in 2025) are ineligible.
• Married couples filing a joint tax return with MAGI above $252,000 (up from $246,000 in 2025) are ineligible.
• Married individuals filing a separate tax return with MAGI above $10,000 (unchanged from 2025) are ineligible.

6. Catch-up contributions for high earners must be Roth.

The biggest headline for 2026 is that high earners over age 50 can no longer make traditional, pre-tax catch-up contributions to a workplace retirement plan; they must make after-tax Roth catchups instead.

This new rule will affect employees who earned more than $150,000 in wages from their employer in the previous year (2025). Making Roth catch-up contributions means you lose the upfront tax deduction on up to $8,000 for 2026. 

Instead, high earners must pay taxes upfront on any catch-up contributions before they are deposited into a Roth account. However, the upside of a Roth is that your withdrawals are tax-free in retirement.

7. Self-employed retirement accounts.

If you don’t have an employer that offers a retirement plan or you’re self-employed, you have excellent options, such as a solo 401(k) or a simplified employee pension (SEP) IRA.

A solo 401(k) is for business owners with no employees other than a spouse. You can contribute as both an employer and an employee. It breaks down to $24,500 as an employee plus 25% of net earnings as your own employer. Plus, if you’re over 50, you can make an additional $8,000 catch-up contribution, or a super catch-up of $11,250 from 60 to 63. However, your total contributions can’t exceed $72,000 for 2026, which is up from $70,000 in 2025.

A SEP-IRA can be used for a business of any size, whether you have employees or not. The annual contribution for 2026 is limited to 25% of net earnings, up to $72,000, up from $70,000 in 2025. No catch-up contributions are allowed with a SEP-IRA.

Review your Retirement Plan

To sum it all up, your retirement plan shouldn’t be on autopilot for 2026. It’s critical to review your progress and strategy, especially if you’re over 50. If you’re over 50 with employee wages that were over $150,000 for 2025, remember that any 2026 catch-up contributions must be Roth.

These aren’t the only changes coming to retirement accounts next year. Consider boosting your contribution rate to hit the new maximum amounts. Every dollar you invest counts and will increase your future financial security. 

If you have any questions, please reach out to us and see how we assist you during this time.