Understanding 401(k) Contribution Limits for 2026

January 5, 2026

A 401(k) is one of the most effective tools available for building retirement savings, but contributions are not unlimited. Each year, the IRS establishes specific caps on how much employees and employers can contribute. Staying within these limits is essential to avoid tax complications and ensure your retirement strategy stays on track.

401(k) Contribution Limits for 2026

Contribution limits increase in 2026. The employee deferral limit rises to $24,500, while the combined employee and employer contribution cap increases to $72,000.

Catch-up contributions for 2026 include:

●     $8,000 for those age 50 or older

●     $11,250 for those ages 60–63, if the plan allows this enhanced catch-up

That means the maximum employee contribution becomes:

●     $32,500 for participants age 50 or older

●     $35,750 for participants ages 60–63, if eligible

As with 2025, some plans allow additional after-tax contributions up to the overall annual limit, provided the combined total does not exceed compensation.

Roth 401(k) Contribution Rules

Roth 401(k) plans follow the same contribution limits as traditional 401(k)s. If you contribute to both Roth and pre-tax accounts, the combined total must stay within the annual employee deferral limit.

For example, in 2026, someone under age 50 cannot contribute more than $24,500 total across all Roth and traditional 401(k) accounts, regardless of how many plans they participate in.

Contribution Limits When You Have Multiple 401(k) Plans

If you participate in more than one 401(k) through different employers, the IRS still applies a single employee contribution limit across all plans combined.

For instance, in 2026, you could split the $24,500 maximum between two different plans, but you may not exceed the limit in total. Employer contributions are tracked separately for each plan.

These limits do not affect IRA contributions—you may still contribute the maximum allowable amount to an IRA in addition to your 401(k) savings.

After-Tax 401(k) Contributions

Some workplace plans allow after-tax contributions once you have reached the pre-tax and Roth limits. These contributions grow tax-deferred while in the plan, and you pay taxes only on the earnings when funds are withdrawn.

If your plan permits it, you may contribute after-tax dollars up to the total employee-plus-employer limit. For example, in 2026, an employee under 50 contributing $24,500, with an employer contribution of $20,000, could potentially add another $27,500 in after-tax contributions to reach the $72,000 cap.

Not all plans offer this feature, so it’s important to review your plan documents or speak with your administrator. If after-tax contributions are not an option, IRAs or other savings vehicles may help bridge the gap.

What Happens If You Contribute Too Much?

Exceeding 401(k) contribution limits can result in double taxation. Excess deferrals are taxed in the year they are made and again when withdrawn if not corrected in time. These amounts are reported on IRS Form 1099-R.

Most plans are designed to prevent overcontributions, but errors can occur—especially if you change jobs or contribute to multiple plans. If you discover an excess contribution, you generally must request a corrective distribution by April 15 of the following year to avoid additional penalties.

How Much Should You Save in a 401(k)?

Determining how much to contribute can feel daunting, but a common guideline is to aim for 15% of your annual income, including employer contributions. This target can include savings in other retirement accounts, such as IRAs.

While this may seem ambitious, especially early in your career, consistency matters more than perfection. Starting small and increasing contributions gradually can make the goal more manageable.

Strategies to Maximize Your 401(k)

To make the most of your retirement plan:

Start early.

The sooner you begin saving, the more time your investments have to benefit from compound growth.

Capture your full employer match.

Employer matching contributions are effectively free money. Contributing enough to receive the full match should be a top priority.

Increase contributions over time.

Gradually raising your contribution rate—such as by 1% annually or when you receive a raise—can significantly boost long-term savings without straining your budget.

Keep track of old plans.

Many people forget about 401(k)s from previous employers. Reviewing past jobs and consolidating accounts where appropriate can help you manage your retirement savings more effectively.

Bottom Line

Understanding annual 401(k) contribution limits—and how to work within them—can help you avoid costly mistakes while maximizing your retirement savings. With thoughtful planning and steady contributions, your 401(k) can remain a cornerstone of long-term financial security.

Sources:

https://www.fidelity.com/learning-center/smart-money/401k-contribution-limits

Disclosure:

This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.

This material is provided as a courtesy and for educational purposes only.

These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.