The 401(k) remains the most widely used employer-sponsored retirement vehicle in the country. Contribution limits went up in 2026, a new Roth catch-up requirement for high earners took effect, and the foundational rules on plan design, vesting, and nondiscrimination testing remain as consequential as ever. Here’s a current reference on how the numbers and rules look this year.
2026 Contribution Limits
Per IRS Notice 2025-67 and the IRS announcement on 2026 retirement plan limits, the elective deferral limit under Section 402(g)(1) increased from $23,500 to $24,500 for 2026. The Section 415(c) total contribution limit, covering combined employee and employer contributions, rose to $72,000.
| Limit | 2025 | 2026 |
|---|---|---|
| Employee elective deferral (Sec. 402(g)) | $23,500 | $24,500 |
| Total contributions, employee + employer (Sec. 415(c)) | $70,000 | $72,000 |
| Catch-up contribution, age 50+ (Sec. 414(v)) | $7,500 | $8,000 |
| Super catch-up, ages 60-63 (SECURE 2.0) | $11,250 | $11,250 |
| Compensation limit (Sec. 401(a)(17)) | $350,000 | $360,000 |
| Highly compensated employee threshold (Sec. 414(q)) | $160,000 | $160,000 |
Participants age 50 or older can contribute up to $32,500 for 2026, combining the standard deferral and the catch-up limit. Those who turn 60, 61, 62, or 63 during 2026 qualify for the SECURE 2.0 super catch-up of $11,250, bringing their total to $35,750. The super catch-up replaces, not adds to, the standard $8,000 catch-up for that age group.
New in 2026: Roth Catch-Up Requirement for High Earners
A SECURE 2.0 provision takes full effect January 1, 2026. Participants age 50 or older whose prior-year FICA wages from the plan’s sponsoring employer exceeded $150,000 are required to make catch-up contributions on a Roth basis. Pre-tax catch-up contributions are no longer available to this group.
The $150,000 threshold is indexed for inflation in future years. For 2026, the relevant figure is the employee’s 2025 FICA wages reported in Box 3 of their W-2. If a plan doesn’t currently offer a Roth contribution option, affected participants won’t be able to make catch-up contributions at all until the plan is amended to add one.
This requirement applies to 401(k), 403(b), and governmental 457(b) plans. It does not apply to SIMPLE plans or governmental 457(b) catch-ups made under the special pre-retirement catch-up provision.
Plan Types
Traditional 401(k)
The most common plan structure. Employees elect to defer a portion of compensation on a pre-tax basis, reducing current taxable income. Employer contributions can be discretionary matching contributions, nonelective contributions, or both, and may be subject to a vesting schedule. Traditional 401(k) plans must pass annual nondiscrimination testing.
Safe Harbor 401(k)
A plan design under IRC Sections 401(k)(12) or 401(k)(13) that exempts the employer from the annual ADP and ACP nondiscrimination tests. The tradeoff is a mandatory employer contribution that must vest immediately. Safe harbor plans also require advance notice to participants (typically distributed before the start of each plan year).
Two common safe harbor contribution formulas:
Basic match: 100% of the first 3% of deferred compensation, plus 50% of the next 2%
Nonelective: 3% of compensation for all eligible employees, regardless of whether they defer
Plans under Section 401(k)(13), which include an automatic enrollment feature, are called Qualified Automatic Contribution Arrangements (QACAs) and carry slightly different matching requirements.
SIMPLE 401(k)
Available to employers with 100 or fewer employees who received at least $5,000 in compensation in the prior year. The elective deferral limit for SIMPLE 401(k) plans is $17,000 for 2026, with a catch-up of $4,000 for participants age 50 or older. SIMPLE 401(k) plans are not subject to ADP or ACP testing, but employer contributions must vest immediately and the plan cannot be combined with other qualified plans of the employer.
How Vesting Works for Employer Contributions
Elective deferrals are always 100% immediately vested. Employer matching and nonelective contributions can follow a vesting schedule set out in the plan document, within statutory limits.
Matching contributions must vest at least as rapidly as a 6-year graded schedule or a 3-year cliff schedule. Nonelective employer contributions can use the same schedules. Safe harbor and SIMPLE 401(k) employer contributions must vest immediately.
The compensation cap for calculating employer and employee contributions is $360,000 for 2026. Contributions based on compensation above that figure do not qualify for the plan.
What the ADP and ACP Tests Require
Traditional 401(k) plans run two tests each plan year. The Actual Deferral Percentage (ADP) test measures whether elective deferrals by highly compensated employees (HCEs) are proportional to those of non-highly compensated employees (NHCEs). The Actual Contribution Percentage (ACP) test applies the same analysis to employer matching contributions.
The HCE threshold for 2026 is $160,000 in prior-year compensation. Plans that fail either test must correct the failure within 12 months of the plan year-end, typically by distributing excess contributions to affected HCEs or by making qualified nonelective contributions (QNECs) to NHCEs.
Top-heavy plans carry additional requirements. A plan is top-heavy when key employee account balances exceed 60% of total plan assets, which triggers a minimum 3% contribution for non-key employees and an accelerated vesting schedule.
Roth Contributions Inside a 401(k)
Plans that permit designated Roth contributions allow participants to contribute on an after-tax basis, within the same elective deferral limit. Roth contributions grow tax-free and come out tax-free in qualified distributions. A plan that offers designated Roth contributions must also offer pre-tax elective deferrals.
For 2026, the combined limit across pre-tax and Roth 401(k) deferrals is $24,500. Participants can split contributions between the two in any proportion the plan allows.
When Funds Can Be Distributed
Elective deferrals are generally only distributable upon specific triggering events: separation from service, death, disability, plan termination, reaching age 59 1/2, or financial hardship. Hardship distributions are limited to the amount necessary to meet the hardship and are subject to income tax and, in most cases, a 10% early withdrawal penalty.
Required Minimum Distributions (RMDs) begin at age 73 for most participants under the SECURE 2.0 changes. RMD rules for designated Roth 401(k) accounts were updated by SECURE 2.0 to align with Roth IRA treatment, eliminating lifetime RMDs for those accounts starting in 2024.
Sources
IRS Notice 2025-67 — 2026 Retirement Plan Contribution Limits
IRS — 401(k) Limit Increases to $24,500 for 2026
IRS — Retirement Topics: 401(k) and Profit-Sharing Plan Contribution Limits