The maximum 401(k) contribution limit—currently $23,500 in 2025—could get a $1,000 boost to $24,500 in 2026, according to Milliman’s latest 2026 Internal Revenue Service (IRS) Limits Forecast, updated on April 14.
The official contribution limit for employees who participate in 401(k), 403(b), and most 457 plans, as well as the federal government’s Thrift Savings Plan, is determined by the IRS, and is typically announced for the following year in late October or early November (the 2025 contribution limits were announced on Nov. 1, 2024).
But by analyzing the latest monthly data from the Consumer Price Index, Milliman is able to put together a forecast of next year’s expected contribution limits. Milliman’s latest report shows that the 2026 elective deferral limit for 401(k), 403(b), most 457 plans, and the Thrift Savings Plan is on track to be $24,500, which would mark a $1,000 increase from this year’s limit. The IRS raised the limit by $500 for 2025 to $23,500.
A provision in SECURE 2.0 permits plan sponsors to elect to treat qualified student loan payments as elective deferrals. Recognition of such loan payments may not exceed this limit—or, if less, the employee’s Internal Revenue Code (IRC) §415(c)(3) compensation for the year—reduced by the employee’s elective deferrals for the year. For 2026, the Milliman forecast has the contribution limit to ESAs for DC plans expected to increase by $100, from $2,500 to $2,600.
Milliman’s limits forecast is projected using two assumption sets. One set is based on the current trailing 12 months of CPI and the second assumes that year-to-date CPI (since September 30, 2024) will continue to increase each month through September 30, 2025 by an estimated 25 basis points (3.0% annual).
When it comes to the maximum annual addition for DC plans—the combined employee and employer contribution limit—Milliman is forecasting a $2,000 increase from $70,000 this year to $72,000 in 2026. In 2024, the total contribution limit rose by $3,000, from $66,000 in 2023 to $69,000 before being bumped to $70,000 for 2025.
The forecast has the catch-up contribution limit (50 and older) for DC plans on track for a $500 bump from $7,500 this year to $8,000 for 2026—with the caveat that it will remain at $11,250 for those ages 60 to 63. Passage of SECURE 2.0 at the end of 2022 made a few changes to catch-up contributions—including that individuals aged 60 to 63 can make higher catch-up contributions to their retirement plans. The limit increases to the greater of $10,000 or 150% of the standard catch-up limit, which is $7,500 for 2025, resulting in a maximum of $11,250.
Starting in 2026, for people who make more than $145,000 (note that the newest Milliman forecast notes this could be increased to $150,000 for 2026), catch-up contributions can only be made after taxes to a Roth account. This was initially set to begin in 2024, but the IRS announced a two-year transition period in 2023. The delay was intended to provide plan sponsors and payroll providers additional time to adjust systems and ensure compliance.
Notably, public hearings scheduled by the IRS and the Department of the Treasury took place on April 7 and 8 to discuss proposed regulations under SECURE 2.0—including those concerning catch-up contributions and automatic enrollment. The hearings provided a platform for stakeholders to present their views on the proposed changes. The IRS is now reviewing the feedback received during these hearings. Final regulations are anticipated to be issued later this year, with effective dates generally set for six months after publication. Employers and plan administrators should monitor these developments to ensure timely compliance with the forthcoming rules.
Read the latest Milliman 2026 IRS Limits Forecast here.
SEE ALSO:
• IRS Gives 2025 401(k) Contribution Limit a $500 Boost
• IRS, Treasury Department Release Proposals on Catch-Up Contributions and Auto Enroll
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.