401(k) Contribution Limits for 2026: Deferral Caps, Catch-Ups, SIMPLE 401(k), Excess Deferrals & Annual Additions

Quick answer up front: Two IRS limit types govern your workplace retirement contributions. First, there’s the employee elective deferral limit (what you choose to defer from pay into eligible plans such as 401(k), 403(b), SARSEP, and SIMPLE).

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Second, there’s the overall annual additions limit (the total that can hit your account from employee deferrals, employer match/nonelective, and forfeiture allocations excluding catch-ups). If you contribute to more than one plan, you must aggregate your deferrals to stay within the rules.

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Exceed the deferral cap and you’ll need a corrective distribution by April 15 of the following year, with specific tax treatment and Form 1099-R reporting. Separate rules apply to SIMPLE 401(k) plans, catch-up contributions (50+), and highly compensated employees under plan testing. Below you’ll find every limit, exception, example, and fix spelled out clearly.

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Two annual limits apply to contributions

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There are two separate IRS limits to know:

1. Employee elective salary deferrals
   

These are the amounts you choose to contribute from your pay, in lieu of salary, to qualifying plans:

1. 401(k) plans
   
   
2. 403(b) plans
   
   
3. SARSEP IRAs (Salary Reduction Simplified Employee Pension)
   
   
4. SIMPLE IRAs (Savings Incentive Match Plan for Employees)
   
   
5. Overall limit on contributions to a participant’s account

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2. This “annual additions” cap applies to the total of:

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1. Elective deferrals (not including catch-up contributions)
   
   
2. Employer matching contributions
   
   
3. Employer nonelective contributions
   
   
4. Allocations of forfeitures
   
   

Both limits matter: you must track your own deferrals across all plans, while your plan sponsor ensures the overall annual additions are not exceeded within each plan.

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Deferral limits for 401(k) plans

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The employee elective deferral limit (traditional and safe harbor 401(k)) is:

• $23,000 (for 2024), following these recent COLA-adjusted benchmarks:
  
  
  
  • $22,500 in 2023
    
    
  • $20,500 in 2022
    
    
  • $19,500 in 2021 and 2020
    
    
  • $19,000 in 2019
    
    

Aggregation rule: You generally aggregate all elective deferrals made to all plans in which you participate to determine if you’ve exceeded the annual limit. If your total elective deferrals go over the limit, you’ll need to correct the excess (details below).

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Related: Review your 401(k) beneficiary as balances grow.

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Deferral limits for a SIMPLE 401(k)

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For SIMPLE 401(k) plans, the employee elective deferral limit is:

• $16,000 (for 2024)
  
  
  
  • $15,500 in 2023
    
    
  • $14,000 in 2022
    
    
  • $13,500 in 2021 and 2020
    
    
  • $13,000 in 2019
    
    

This figure may increase in future years via cost-of-living adjustments.

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Plan-based restrictions on elective deferrals

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Your plan document can set a lower elective deferral limit than the IRS maximum. Also, if you’re a manager, owner, or highly compensated employee (HCE), your plan may need to limit your deferrals to pass nondiscrimination testing (e.g., ADP tests). These plan-based limits can restrict HCE deferrals below the IRS ceiling.

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Catch-Up Contributions for Individuals Age 50 and Older

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If your employer’s 401(k) plan allows it, participants who are age 50 or older by the end of the calendar year can make catch-up contributions. These contributions let you defer additional amounts beyond the standard annual limits:

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• Traditional and Safe Harbor 401(k) plans:
  
  
  
  • $7,500 in 2023 and 2024
    
    
  • $6,500 in 2022, 2021, and 2020
    
    
  • $6,000 in 2019 through 2015
    
    
• SIMPLE 401(k) plans:
  
  
  
  • $3,500 in 2023 and 2024
    
    
  • $3,000 in 2015 through 2022
    
    

These amounts are periodically adjusted for cost-of-living increases. Importantly, you don’t need to be “behind” on contributions to take advantage of catch-up contributions eligibility is based solely on age.

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Catch-Up Contributions in Multiple Employer Plans

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If you participate in retirement plans sponsored by different employers, you may still make catch-up contributions even if those individual plans do not specifically allow them. In this situation, it is your responsibility to track your total contributions and ensure they don’t exceed the allowed limits.

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Example:

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Joe Saver, age 50+, works for only one employer in 2020. If that employer’s 401(k) plan allows catch-up contributions, he could contribute up to $26,000 that’s the standard deferral limit of $19,500 plus the $6,500 catch-up limit. But if the plan does not allow catch-up contributions, Joe’s maximum contribution would be just $19,500.

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However, if Joe works for two unrelated employers in the same year and contributes to two different 401(k) plans, he could still contribute up to $26,000 total even if neither plan permits catch-up contributions individually. The catch: he cannot contribute more than $19,500 to any one plan, and he must keep track of his combined contributions himself.

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Treatment of excess deferrals

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You have an excess deferral if your total elective deferrals to all plans exceed the annual deferral limit for the year.

Action required: Notify your plan administrator by April 15 of the following year that you want the excess deferral amount, adjusted for earnings, distributed from the plan. (This April 15 date is not tied to your tax return filing deadline; it’s a fixed calendar date.)

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If the excess is withdrawn by April 15

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• The excess deferrals for, say, 2020 are includable in your 2020 gross income.
  
  
• Earnings on those excess deferrals are taxed in the year distributed.
  
  
• The corrective distribution is not subject to the additional 10% early distribution tax.
  
  

If the excess is not withdrawn by April 15

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• The excess (taxed in the contribution year) is not added to your cost basis for future distributions.
  
  
• Practically, the excess left in the plan risks being taxed twice (once when contributed and again when later distributed).
  
  
• Allowing the excess to remain can jeopardize plan qualification.
  
  

1099-R reporting

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Corrective distributions of excess deferrals (including earnings) are reported on Form 1099-R.

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Overall limit on contributions (“annual additions”)

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Total annual contributions (a.k.a. annual additions) to all of your accounts in plans maintained by one employer (and any related employer) are limited. This cap covers:

• Elective deferrals (excluding catch-ups)
  
  
• Employer matching contributions
  
  
• Employer nonelective contributions
  
  
• Allocations of forfeitures
  
  

The annual additions cannot exceed the lesser of:

• 100% of the participant’s compensation, or
  
  
• The dollar cap per year:
  
  
  
  • $69,000 ($76,500 including catch-ups) for 2024
    
    
  • $66,000 ($73,500 with catch-ups) for 2023
    
    
  • $61,000 ($67,500 with catch-ups) for 2022
    
    
  • $58,000 ($64,500 with catch-ups) for 2021
    
    
  • $57,000 ($63,500 with catch-ups) for 2020
    
    

Employer deduction limit: An employer’s deduction for contributions to a defined contribution plan (profit-sharing or money purchase pension) generally cannot exceed 25% of the total eligible compensation paid or accrued during the year to participating employees (see IRS Publication 560).

There are separate, smaller limits for SIMPLE 401(k) plans.

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Also read - hsa contribution limits 2025​

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Examples (multiple plans and catch-ups)

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Example 1:

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In 2020, Joe Saver, age 46, is employed by a company with a 401(k) and also works as an independent contractor for an unrelated business, where he sets up a solo 401(k). Joe Saver defers the maximum $19,500 to his employer’s plan. He cannot make additional elective deferrals to his solo 401(k) because he’s already hit his personal deferral maximum across all plans.

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However, Joe Saver has enough earned income from his business to contribute up to the overall maximum for the year, $57,000 (2020). He can make nonelective contributions to his solo 401(k) to reach that $57,000 limit. The annual additions limit applies to each plan separately, so his employer-plan deferrals don’t reduce the solo 401(k)’s nonelective room.

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Example 2:

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If Joe Saver were 52 in 2020 (eligible for catch-ups), he could contribute an additional $6,500 of elective deferrals for 2020, split between the plans in any proportion or entirely to the solo 401(k). His total could reach $63,500 ($57,000 annual additions + $6,500 catch-up), because the $57,000 cap excludes catch-ups.

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2026 IRS Limits Forecast using actual FFY 2025 CPI as of March 31, 2025

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Compensation limit for contributions

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Remember: annual contributions across all accounts maintained by one employer (and any related employer) including elective deferrals, employee contributions, employer matching/nonelective contributions, and allocations of forfeitures (excluding catch-ups) may not exceed the lesser of 100% of compensation or the dollar cap for that year ($69,000 for 2024, etc.; $76,500 with catch-ups).

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In addition, there’s a compensation cap the maximum comp that can be used to determine employer and employee contributions:

• $345,000 for 2024
  
  
• $330,000 for 2023
  
  
• $305,000 for 2022
  
  
• $290,000 for 2021
  
  $285,000 for 2020

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2026 outlook (context)

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The IRS updates these limits annually through cost-of-living adjustments. While the historical numbers above are fixed, you should expect modest increases for 2026 if inflation warrants it. Your plan will apply the official IRS figures once announced.

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How Federal Pension Advisors Can Help You?

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Understanding 401(k) contribution limits, catch-up rules, and IRS regulations is only half the battle the real challenge is making the most of these opportunities for your retirement strategy. That’s where Federal Pension Advisors comes in.

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1. Our team specializes in helping federal employees, retirees, and their families:

2. Maximize retirement savings while staying within IRS contribution rules.

3. Optimize TSP, 401(k), and IRA contributions to reduce taxes now and in retirement.

4. Plan catch-up contributions strategically if you’re age 50 or older.

5. Navigate HCE (Highly Compensated Employee) testing rules to avoid surprises.

6. Build a complete retirement income plan that integrates federal benefits with personal savings.

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Whether you’re still working, nearing retirement, or already retired, we’ll help you create a clear plan so your savings last and your retirement goals stay on track.

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FAQs 

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1. What is the 401(k) limit for 2025?

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The 401(k) elective deferral limit for 2025 is $23,500, up from $23,000 in 2024 IRS+1.

For participants aged 50 or over, an additional catch-up contribution of $7,500 is allowed. That means those over 50 can contribute up to $31,000 total to their 401(k) in 2025 IRSAP News.

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2. What is the 401(k) limit for 2026?

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While the IRS hasn't officially announced the 2026 limits yet, industry projections expect modest increases due to inflation:

• Elective deferral limit: ~$24,500
  
  
• Catch-up contribution (age 50+): ~$8,000
  
  
• Enhanced catch-up (age 60–63, under SECURE 2.0): ~$11,250 federalpensionadvisors.
  
  

3. Who is a highly compensated employee in 2026?

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Per IRS guidance:

• An employee is considered highly compensated (HCE) if they:
  
  
  • Owned more than 5% of the company during the current or prior year, or
    
    
  • Earned more than $160,000 in 2025, the threshold for determining HCE status in the 2026 plan year StandardIRSInvestopedia.
    
    

This aligns with IRS’s lookback year approach to HCE determination IRSStandard.

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4. How much can I contribute to my 401(k) if over 50?

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Here’s how much you can contribute, depending on age and 2024–2025 limits:

• 2025:
  
  
  
  • Regular elective deferral: $23,500
    
    
  • Age 50+ catch-up: $7,500
    
    
  • Total possible contribution: $31,000 IRSAP News
• Projected for 2026:
  
  
  
  • Elective deferral: ~$24,500
    
    
  • Catch-up: ~$8,000
    
    
  • Projected total: ~$32,500

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