"The annual contribution limit for employees participating in 401(k), 403(b), most 457 plans, and the federal Thrift Savings Plan will rise to $24,500 in 2026, up from $23,500 for 2025. This is a notable increase, with investors now able to put another $1,000 per year pre-tax in these accounts, and garner the taxable deduction for FY26 for their taxes which will be reported in 2027."
"For those who find themselves on the higher end of the income spectrum, the tax breaks one receives from investing in these plans can be material. And even for those investors who are starting out, a smaller tax break (but a longer time horizon to grow their retirement portfolios) can mean big upside for those looking to save for a big and beautiful retirement."
The IRS raised annual contribution limits for workplace retirement plans effective 2026 to reflect cost-of-living adjustments. Employee elective deferral limits for 401(k), 403(b), most 457 plans, and the federal Thrift Savings Plan increase to $24,500, up from $23,500 for 2025, allowing an additional $1,000 of pre-tax contributions. Contributions for FY26 provide taxable deductions reported in 2027. The increase benefits higher-income savers with material tax breaks and benefits early savers through longer compounding horizons. Greater reliance on employer-sponsored retirement accounts is advised given concerns about future Social Security trust fund shortfalls.
Read at 24/7 Wall St.
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