The IRS adjusts retirement account contribution limits most years based on inflation, and 2026 brought a few changes worth knowing about — especially if you’re trying to maximize your tax-advantaged savings. Here’s what’s different this year and how to make the most of it.
2026 IRA Contribution Limits
The annual contribution limit for Traditional and Roth IRAs in 2026 is $7,000 if you’re under 50, and $8,000 if you’re 50 or older (the extra $1,000 is the catch-up contribution). These limits are unchanged from 2025, as inflation adjustments didn’t cross the threshold for an increase.
Remember, the $7,000 limit is the combined total across all your IRA accounts. If you have both a Traditional and a Roth IRA, your total contributions to both cannot exceed $7,000 (or $8,000 with catch-up). You can split the contribution however you like between the two, but going over the combined limit triggers a 6% excess contribution penalty for every year the excess stays in the account.
Roth IRA Income Phase-Outs
Roth IRA contributions are subject to income limits. For 2026, the phase-out ranges are:
- Single filers: $150,000 – $165,000 MAGI (modified adjusted gross income)
- Married filing jointly: $236,000 – $246,000 MAGI
If your income falls within the phase-out range, you can contribute a reduced amount. Above the upper limit, direct Roth IRA contributions aren’t allowed. However, the backdoor Roth strategy — contributing to a Traditional IRA and then converting to Roth — remains available regardless of income. There’s no income limit on conversions, only on direct contributions.
401(k) and Workplace Plans
For employer-sponsored plans, the 2026 limits are:
- Employee contribution: $23,500 (up from $23,000 in 2025)
- Catch-up contribution (age 50+): $7,500
- New: Enhanced catch-up (ages 60-63): $11,250
- Total employee + employer limit: $70,000
The enhanced catch-up for ages 60-63 was introduced by SECURE Act 2.0 and is now in effect. If you’re in that age window, you can contribute up to $34,750 in employee deferrals alone ($23,500 + $11,250). That’s a significant tax-advantaged savings opportunity that only lasts four years, so take advantage of it if you can.
The Rollover Opportunity
If you’ve changed jobs recently or have old 401(k) accounts sitting with former employers, now is a good time to consider a rollover. Moving an old 401(k) to an IRA gives you more investment options, typically lower fees, and full control over the account.
A few rollover rules to keep straight:
Direct rollover vs. indirect rollover. Always do a direct rollover (also called a trustee-to-trustee transfer). The money moves directly from your old plan to your new IRA without you touching it. An indirect rollover sends the check to you, withholds 20% for taxes, and gives you 60 days to deposit the full amount (including the 20% you have to replace out of pocket) into an IRA. Miss the 60-day window and the entire amount becomes a taxable distribution plus a 10% penalty if you’re under 59½. Direct rollover avoids all of this.
Traditional to Traditional, Roth to Roth. Match the account types to avoid triggering a taxable event. Rolling a Traditional 401(k) into a Traditional IRA is tax-free. Rolling a Traditional 401(k) into a Roth IRA is legal but counts as a Roth conversion — you’ll owe income tax on the converted amount. That can be a smart move in a low-income year, but it’s expensive if your income is already high.
Don’t roll over employer stock carelessly. If your old 401(k) holds company stock with significant appreciation, look into Net Unrealized Appreciation (NUA) rules before rolling it over. NUA treatment can save substantial taxes on employer stock by letting you pay capital gains rates instead of ordinary income rates on the appreciation.
The Simple Action Plan
If you haven’t made your 2026 IRA contribution yet, the deadline is April 15, 2027. But contributing early in the year gives your money more time to grow. Even if you can’t contribute the full $7,000 at once, set up automatic monthly transfers — $584 per month gets you to $7,000 by December.
Max out your 401(k) match first (that’s free money), then fund your IRA, then go back and increase your 401(k) deferrals if you have additional savings capacity. This ordering maximizes both the employer match and your investment flexibility.
Tax-advantaged space is limited and valuable. Use all of it that you can.
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