Retirement Plan Contribution Limits: A Quick CPA Reference

Retirement plan contribution limits change regularly, and even a small year-over-year adjustment can affect payroll elections, owner contributions, tax planning, and year-end projections. For CPAs, business owners, and professionals in Phoenix, having the current numbers in one place can make client conversations and planning more efficient.

For 2026, the IRS increased several major retirement plan limits. The employee deferral limit for most 401(k), 403(b), and governmental 457 plans is $24,500, while the IRA contribution limit is $7,500. Catch-up rules also deserve extra attention because different limits apply depending on a participant’s age and, in some cases, prior-year wages.

What local readers should know

• The 2026 employee elective deferral limit for most 401(k), 403(b), and governmental 457 plans is $24,500.

• Participants age 50 or older can generally make an additional $8,000 catch-up contribution, subject to plan terms.

• Participants who are age 60, 61, 62, or 63 during 2026 may qualify for a higher $11,250 catch-up limit.

• Phoenix-area employers should review payroll elections and plan administration before year-end rather than assuming prior-year limits still apply.

• Business owners throughout Maricopa County should distinguish employee deferral limits from the larger overall defined contribution plan limit.

2026 Retirement Plan Contribution Limits at a Glance

The main 2026 retirement plan limits include a $24,500 employee deferral limit for most 401(k), 403(b), and governmental 457 plans, a $72,000 defined contribution annual additions limit, and a $7,500 IRA contribution limit. These figures provide a practical starting point for Phoenix-area tax and retirement planning.

The IRS also sets separate rules for certain SIMPLE plans, 403(b) service-based catch-ups, and other specialized arrangements. Plan documents and participant circumstances should always be reviewed before applying a limit.

Why These Limits Matter for Phoenix Businesses and Professionals

These retirement plan limits matter locally because Phoenix business owners often make retirement planning decisions alongside year-end payroll, compensation, estimated tax, and entity-level planning. A higher contribution limit can create additional planning opportunities, but only when payroll systems, plan documents, and contribution timing are coordinated correctly.

For companies operating in Downtown Phoenix, the Biltmore area, the Camelback Corridor, and surrounding Maricopa County communities, the fourth quarter is a useful time to compare actual year-to-date deferrals with the maximum available contribution.

For readers in the area, Fiduciary Advisors, LTD. is the local business behind this reference. We encourage employers and professionals to treat the published IRS limits as the beginning of the planning discussion rather than the entire analysis.

What Changed for Catch-Up Contributions in 2026?

Catch-up contributions require closer review in 2026 because the standard catch-up is $8,000 for eligible participants age 50 and older, while participants who are age 60 through 63 may qualify for an $11,250 limit. Certain higher-paid participants also face a Roth catch-up requirement beginning in 2026.

For applicable employer plans with Roth features, participants whose prior-year wages from the sponsoring employer exceeded $150,000 generally must make 2026 catch-up contributions on a Roth basis.

That detail can be especially important for owners, executives, and highly compensated employees in Phoenix, Scottsdale, Tempe, and Chandler. Payroll and plan systems need to identify affected participants correctly so that catch-up contributions receive the required treatment.

Local Planning Points for Business Owners and CPAs

Phoenix-area business owners and CPAs should review the interaction between employee deferrals, employer contributions, compensation limits, and plan-specific provisions instead of treating the $24,500 employee limit as the total amount that can enter a retirement account.

The $72,000 defined contribution limit generally applies to annual additions such as employee deferrals, employer matching contributions, employer nonelective contributions, and certain forfeiture allocations. Eligible catch-up contributions are generally outside that basic annual additions ceiling.

For an owner with a closely held business in Mesa, Glendale, or Chandler, this distinction can materially change year-end contribution planning. The right calculation depends on compensation, plan design, ownership, employee participation, and other factors.

Warning Signs That a Contribution Review Is Needed

A contribution review is especially useful when payroll elections, employee ages, ownership changes, or multiple retirement plans make the applicable limit less obvious. Phoenix employers should address these issues before the final payrolls of the year whenever possible.

Watch for these warning signs:

• An employee is approaching age 50 or will be age 60 through 63 during the year.

• An owner contributes to retirement plans through more than one business or employer.

• Payroll is still using contribution limits from the prior year.

• A participant’s deferrals are approaching the annual maximum earlier than expected.

• Employer profit-sharing or nonelective contributions are being calculated near year-end.

• A participant subject to the 2026 Roth catch-up rule is making catch-up contributions.

• A business recently adopted, amended, or changed its retirement plan.

• The employer is unsure whether SIMPLE, SEP, 401(k), or another plan structure applies to a particular contribution.

Common Retirement Plan Contribution Mistakes

The most common contribution mistakes come from applying the right number to the wrong situation, overlooking catch-up eligibility, or failing to coordinate multiple contribution sources. These errors can create unnecessary correction work for local employers and their tax and retirement professionals.

Mistake: Treating $24,500 as the total 401(k) account contribution limit.
Consequence: Employer contributions may be overlooked during planning.
Better approach: Separate the employee elective deferral limit from the overall annual additions limit.

Mistake: Assuming every participant age 50 or older has the same catch-up amount.
Consequence: Participants age 60 through 63 may miss the higher catch-up opportunity.
Better approach: Review each participant’s age during the calendar year.

Mistake: Ignoring the Roth catch-up requirement.
Consequence: A contribution may be processed using the wrong tax treatment.
Better approach: Review prior-year wages and plan capabilities before processing catch-up deferrals.

Mistake: Waiting until the final days of December to review payroll.
Consequence: There may be less time to correct elections or administrative issues.
Better approach: Begin the review before year-end payroll deadlines.

Common Phoenix Retirement Planning Scenario

A common Phoenix scenario involves an owner or executive reviewing retirement contributions late in the year after compensation and business income become easier to estimate. The key question is not simply, “How much can I put into the plan?” but which limit applies to each type of contribution.

For example, an eligible participant might have employee salary deferrals, an employer match, a profit-sharing contribution, and an age-based catch-up contribution. Each component can be subject to different rules.

This situation can arise across professional practices, family businesses, and other employers throughout Maricopa County. The numbers should be coordinated with the actual plan provisions rather than applied from a generic contribution-limit chart alone.

Comparing Common Retirement Plan Options

The right retirement plan depends on more than the maximum contribution amount because administrative requirements, employee participation, employer contribution formulas, and business goals can differ substantially. Phoenix-area employers comparing plans should consider both current-year contribution potential and ongoing plan responsibilities.

A SEP IRA may offer relatively straightforward employer-funded contributions, while a SIMPLE IRA has its own employee deferral and employer contribution structure. A 401(k) may provide additional plan-design possibilities but generally involves more administration.

The best fit for a business in Phoenix, Scottsdale, Tempe, Mesa, or another nearby community depends on its workforce, compensation structure, ownership, and retirement objectives.

Cost of Ignoring Updated Contribution Limits

Ignoring updated retirement plan limits can lead to missed savings opportunities, incorrect payroll processing, excess contributions, or additional correction work. The risk is especially relevant near year-end, when Phoenix businesses may have only a limited number of payroll cycles remaining to adjust employee deferrals.

Reviewing contribution totals earlier gives employers, participants, CPAs, payroll providers, and retirement plan professionals more time to identify discrepancies.

Frequently Asked Questions About Retirement Plan Contribution Limits

The most common questions from Phoenix-area employers and professionals involve the 2026 401(k) limit, catch-up contributions, IRAs, SIMPLE plans, SEP contributions, and the difference between employee and overall plan limits.

What is the 401(k) contribution limit for 2026?

The 2026 employee elective deferral limit for a traditional or Roth 401(k) is $24,500. This is the employee contribution limit, not necessarily the total amount that may enter the participant’s account when employer contributions are included.

How much can someone age 50 or older contribute to a 401(k) in 2026?

An eligible participant age 50 or older can generally contribute the $24,500 regular deferral plus an $8,000 catch-up contribution, for a total of $32,500. Participants who are age 60 through 63 have a different higher catch-up limit.

What is the 2026 catch-up limit for someone age 60 through 63?

The higher 2026 catch-up contribution limit for participants who are age 60, 61, 62, or 63 is $11,250 for most applicable 401(k), 403(b), and governmental 457 plans. Plan terms still matter, so eligibility should be confirmed before changing payroll elections.

Do higher-paid Phoenix employees have to make Roth catch-up contributions?

Certain higher-paid participants do. Beginning in 2026, affected participants with more than $150,000 in prior-year wages from the sponsoring employer generally must make catch-up contributions on a Roth basis when the applicable rules apply.

What is the 2026 IRA contribution limit?

The 2026 IRA contribution limit is $7,500. Individuals age 50 or older may generally contribute an additional $1,100 catch-up amount, subject to the rules governing the particular traditional or Roth IRA contribution.

What is the maximum SEP contribution for 2026?

The maximum SEP contribution for 2026 is generally the lesser of the applicable percentage of compensation or $72,000. Compensation rules and self-employed contribution calculations can affect the actual allowable amount.

Should a Phoenix business review contribution limits before December?

Yes. Reviewing contribution limits before the final payrolls of the year can provide more time to adjust elections, evaluate catch-up eligibility, coordinate employer contributions, and address administrative questions before deadlines become more restrictive.

Can someone contribute to more than one retirement plan?

Yes, but participating in multiple plans can create overlapping contribution limits and aggregation rules. A Phoenix professional who changes employers, owns a side business, or participates in multiple plans should review all contributions together before assuming each account has a separate maximum.

Get Clear on Your 2026 Retirement Plan Limits

The right contribution strategy starts with accurate limits and a clear understanding of how those limits apply to the individual, employer, and plan. For Phoenix and surrounding Maricopa County businesses, reviewing the numbers before year-end can make retirement planning more orderly and help reduce avoidable contribution errors.

Make Your 2026 Retirement Plan Decisions With Better Information

We can help you evaluate how current retirement plan limits relate to your situation and available options.