You can contribute even more to your 401(k) and IRA in 2026
The IRS announced Thursday that it will increase 401(k) contribution limits to $24,500 next year, an increase of $1,000 from its current level.
The new limit also applies to other retirement savings plans, such as the Federal Retirement Savings Plan and government 457 plans. Meanwhile, the limit for IRA contributions is $7,500 in 2026, up from $7,000 this year.
For workers age 50 and older, the new “catch-up” contribution limit is $8,000 for most retirement savings plans, including 401(k). This change allows them to build savings more quickly, since they might have started later in their professional lives.
The 401(k) is the most popular retirement plan, with many employers choosing to contribute to their employees’ plans. In 401(k) plans, workers set aside a portion of their salary and put it into the account. It’s not taxable until the money is withdrawn from the 401(k) plan.
The median account balance varies by age group, with older employees generally having a larger nest egg saved since they have spent more time in the workforce.
The median balance for a worker ages 25 to 34 is $16,255, according to data collected by Vanguard. For workers nearing retirement age in the 55 to 64 age range, the median 401(k) balance is $95,642.
The Trump administration is establishing similar savings plans for newborns, known as “Trump accounts,” that will come with $1,000 in federal cash for children born from 2025 through the end of 2028 — the length of the president’s second term. Beneficiaries can withdraw some of the money starting at age 18 in certain circumstances, such as paying for college.
