The Internal Revenue Service (IRS) has released its annual inflation-adjusted limits for benefit plans effective in 2026. These updates impact retirement savings, health accounts, and certain payroll and compensation thresholds used in benefit plan administration. Understanding these figures ensures accurate plan design, payroll setup, participant communication, and regulatory compliance.
Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) Limits
Flexible Spending Accounts (FSAs)
Health Care FSA. Health care FSA salary reduction limit: $3,400 (up from $3,300)
Dependent Care FSA. Dependent care FSA limits have also been updated, with an increase to $7,500 per household (up from $5,000), providing additional flexibility for family care expenses.
Important: Employers should also note updates to FSA carryover limits (e.g., increased carryover amounts), which affect plan design and administration.
Health Savings Account (HSA) Limits
For individuals enrolled in a qualifying high deductible health plan:
Self-only HSA contribution limit: $4,400 (up from $4,300)
Family HSA contribution limit: $8,750 (up from $8,550)
Catch-up contribution (age 55+): $1,000 (unchanged)
These limits factor into both pre-tax contributions and employer HSA contributions.
Retirement Plan Contributions and Limits
401(k), 403(b), and 457(b) Elective Deferrals
For calendar year 2026, the basic elective deferral limit — the amount an employee can contribute from wages — is $24,500 (up from $23,500 in 2025). Employees who participate in 401(k), 403(b), or governmental 457(b) plans use this limit for both pre-tax and Roth contributions.
Catch-Up Contribution Limits
Catch-up limits allow employees 50 or older to accelerate retirement savings in the years closer to retirement. Employees that are 50 or older can make additional catch-up contributions up to $8,000 (up from $7,500). In addition, employees that are 60 – 63 may use a “super catch-up” limit of $11,250 if the employer’s plan permits.
Mandatory Roth Catch-Up for High Earners
Under the SECURE 2.0 Act, starting in 2026, participants with FICA wages over $150,000 in the prior year who make catch-up contributions must direct those catch-ups into a Roth (after-tax) account if the plan offers Roth options. This change removes the ability to make traditional pre-tax catch-up contributions for affected high-earning participants.
Defined Contribution and Benefit Plan Limits
Plans subject to Internal Revenue Code Section 415 limits — such as profit-sharing, money purchase, and other defined contribution plans:
– Total annual additions limit (employee + employer): $72,000 (up from $70,000)
– Defined benefit annual benefit limit: $290,000 (up from $280,000)
These figures are critical for compliance testing and benefit accrual calculations.
Other Retirement-Related Thresholds
- Annual compensation limit (for plan contribution testing): $360,000 (up from $350,000).
- Highly compensated employee definition: $160,000 (unchanged or inflation-adjusted depending on IRS guidance).
- SIMPLE plan elective deferrals: $17,000 (up from $16,500).
IRAs and Retirement Savings Outside Employer Plans
- Traditional and Roth IRA contribution limit: $7,500 (up from $7,000)
- IRA catch-up contribution (age 50+): $1,100 (up from $1,000)
IRA limits are separate from workplace plans and apply regardless of employment status.