Tracking Annual Limits and Catch-Up Contributions: Helping Employees Maximize Tax-Advantaged Saving

Every year, the IRS adjusts the contribution limits for 401(k) plans, IRAs, and other tax-advantaged accounts to keep pace with inflation. For 2026, several of these limits have increased again, and a significant new rule — mandatory Roth catch-up contributions for higher-income earners — takes effect for the first time. Employers and plan sponsors play a key role in helping employees understand these changes so they can make the most of every tax-advantaged dollar available to them.

Below is a practical rundown of the 2026 limits, who they apply to, and what employees should be doing right now to take full advantage of them.

2026 Employer-Sponsored Plan Limits

For 401(k), 403(b), most 457 plans, and the federal Thrift Savings Plan (TSP), the IRS has set the following limits for 2026 (IRS):

·       Employee elective deferral limit: $24,500 (up from $23,500 in 2025)

·       Standard catch-up contribution (age 50+): $8,000 (up from $7,500), bringing the total to $32,500

·       "Super" catch-up contribution (ages 60, 61, 62, and 63 only): $11,250, which replaces the standard catch-up amount for this age band and brings the total available to $35,750

The super catch-up provision, introduced under SECURE 2.0, gives employees in their early sixties a meaningful boost in the final stretch before retirement — but only during the specific years they are age 60 through 63. Employees should confirm with HR or their plan administrator whether their plan has adopted this optional provision, since not all plans are required to offer it.

The New Mandatory Roth Catch-Up Rule for Higher Earners

The most consequential change for 2026 is the mandatory Roth catch-up contribution rule under SECURE 2.0. Starting January 1, 2026, employees age 50 or older whose prior-year FICA wages (Box 3 of Form W-2) from the plan-sponsoring employer exceeded the indexed threshold — $150,000 for 2025 wages — must make all catch-up contributions to a Roth account — after-tax — rather than pre-tax (SHRM; National Law Review).

Key points employees and employers should understand:

·       The $150,000 threshold is indexed for inflation. It is based on the prior calendar year's FICA wages from the specific employer sponsoring the plan—not total household income, income from other employers, or self-employment income.

·       This rule applies to 401(k), 403(b), and governmental 457(b) plans. SIMPLE IRAs, SEP plans, and traditional and Roth IRAs are not affected.

·       Employees who exceed the wage threshold and whose plan does not offer a Roth deferral option will not be able to make any catch-up contributions at all until the plan is amended to add one.

·       Partners and self-employed individuals who do not receive FICA wages are not subject to this requirement.

·       2026 is treated as a good-faith transition year by the IRS, but the requirement itself is mandatory now — not optional or delayed (Vedder Price).

This is a good moment for employees near or above the $150,000 wage threshold to check their most recent W-2 and talk to their plan administrator about whether their catch-up elections need to change (IRS: Retirement Topics — Catch-Up Contributions).

IRA and Roth IRA Limits

For 2026, IRA limits also increased (IRS):

·       Traditional and Roth IRA contribution limit: $7,500 (up from $7,000)

·       IRA catch-up contribution (age 50+): $1,100 (up from $1,000), bringing the total to $8,600

Income phase-out ranges for 2026 are as follows:

Situation2026 Phase-Out RangeTraditional IRA deduction — single, covered by a workplace plan$81,000–$91,000Traditional IRA deduction — married filing jointly, contributing spouse covered by a workplace plan$129,000–$149,000Traditional IRA deduction — contributing spouse not covered, but married to someone who is$242,000–$252,000Roth IRA eligibility — single or head of household$153,000–$168,000Roth IRA eligibility — married filing jointly$242,000–$252,000

Employees who are phased out of a deductible Traditional IRA or direct Roth IRA contribution may still want to discuss backdoor Roth conversion strategies with a tax or financial professional.

SIMPLE Plans and Small-Business Employees

Employees at small businesses using SIMPLE IRA or SIMPLE 401(k) plans have their own set of 2026 limits (IRS):

·       Standard SIMPLE contribution limit: $17,000 (up from $16,500)

·       Higher limit for certain applicable SIMPLE plans: $18,100

·       Catch-up contribution (age 50+): $4,000 for standard SIMPLE plans; $3,850 for certain applicable SIMPLE plans

·       Super catch-up (ages 60–63): $5,250

Note that SIMPLE IRAs are not subject to the mandatory Roth catch-up rule described above.

Don't Overlook the HSA

For employees enrolled in a high-deductible health plan, Health Savings Accounts remain one of the most tax-efficient savings vehicles available — contributions are deductible, growth is tax-deferred, and qualified withdrawals are tax-free. For 2026 (IRS Rev. Proc. 2025-19; National Law Review):

·       Self-only coverage limit: $4,400

·       Family coverage limit: $8,750

·       Catch-up contribution (age 55+, not enrolled in Medicare): $1,000 (unchanged, as this amount is fixed by statute)

Spouses who are both 55 or older and HSA-eligible can each make the $1,000 catch-up contribution, but only into their own separate HSA.

The Saver's Credit

Lower- and moderate-income employees who contribute to a 401(k), 403(b), IRA, or ABLE account may also qualify for the Saver's Credit, which is a direct credit against taxes owed — not just a deduction. For 2026, the income limits are (IRS):

·       Married filing jointly: up to $80,500

·       Head of household: up to $60,375

·       Single or married filing separately: up to $40,250

Many eligible employees don't realize this credit exists, so it's worth flagging to lower-earning staff during open enrollment or year-end benefits communications.

What Employers and Employees Should Do Now

1.      Review payroll deferral elections early in the year. Percentage-based elections that were sufficient in 2025 may fall short of the new 2026 dollar limits.

2.     Identify employees affected by the mandatory Roth catch-up rule. HR and payroll teams should confirm which employees exceeded $150,000 in FICA wages in 2025 and verify the plan offers a Roth deferral option.

3.     Flag the super catch-up window for employees turning 60–63. This is a limited-time opportunity that resets each year within that four-year band.

4.     Remind employees approaching IRA phase-out ranges to evaluate whether a Roth conversion strategy or spousal IRA makes sense.

5.     Promote HSA catch-up eligibility to employees turning 55, and clarify the separate-account rule for HSA-eligible spouses.

6.     Communicate the Saver's Credit to employees who may not know they qualify.

Tracking these limits isn't just a compliance exercise — it's one of the most effective, no-cost ways to help employees build long-term financial security. A short reminder at the start of the plan year, paired with a mid-year check-in, can meaningfully increase how much employees actually save in tax-advantaged accounts.

How Duncan Williams Asset Management Can Help

Keeping up with shifting IRS limits and new rules like the mandatory Roth catch-up requirement is a year-round job — and one most HR and payroll teams don't have the bandwidth to do alone. Duncan Williams Asset Management (DWAM) works alongside plan sponsors and their employees to turn these updates into action:

·       Plan-level readiness reviews. We help plan sponsors confirm their 401(k), 403(b), or 457(b) plan document and payroll systems are set up to identify Roth catch-up-required employees and administer the new rule correctly, in coordination with your recordkeeper, TPA, and ERISA counsel.

·       Employee-level contribution check-ups. We meet with individual employees to review current deferral elections against the new 2026 limits and adjust them so no one leaves tax-advantaged savings capacity on the table.

·       Personalized catch-up strategy planning. For employees 50 and older — especially those in the age 60–63 super catch-up window or above the $150,000 Roth catch-up threshold — we help map out how much to contribute, in what account type, and how it fits their broader retirement timeline.

·       IRA and backdoor Roth guidance. For employees phased out of deductible IRA or direct Roth IRA contributions, we walk through whether a backdoor Roth conversion or spousal IRA strategy makes sense, in coordination with their tax preparer.

·       HSA and tax-advantaged account coordination. We help employees see how HSA contributions fit alongside retirement savings as part of one coordinated, tax-efficient plan.

·       Ongoing employee education. We provide open-enrollment and mid-year briefings—in person, virtually, or in writing—so employees understand and act on limit changes like these instead of missing them.

·       Saver's Credit awareness. We help identify and communicate with lower- and moderate-income employees who may qualify for this often-overlooked tax credit.

If your organization would like help reviewing your plan's readiness for the 2026 changes or rolling out employee education on these updates, reach out to Duncan Williams Asset Management at (901) 435-4250.

Disclosure

This article is provided for general informational and educational purposes only and does not constitute personalized investment, tax, or legal advice. The contribution limits, income thresholds, and rules described above reflect IRS guidance for the 2026 tax year as of the date of publication and are subject to change; always confirm current limits and eligibility rules with the IRS or your plan administrator before making decisions. This material does not take into account any individual's specific financial situation, objectives, or needs, and it should not be relied upon as the sole basis for any financial, tax, or retirement planning decision. Nothing herein should be construed as an offer or solicitation to buy or sell any security. Investing involves risk, including the possible loss of principal. Employees and plan sponsors should consult with a qualified financial advisor, tax professional, ERISA counsel, or plan administrator regarding their specific circumstances before acting on any information contained in this article. This firm is a Registered Investment Adviser; registration does not imply a certain level of skill or training. Past performance is not indicative of future results.

Sources

·       IRS: 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500 (IR-2025-111)

·       IRS: Retirement Topics — Catch-Up Contributions

·       IRS: Revenue Procedure 2025-19 (2026 HSA and HDHP limits)

·       SHRM: Rules Finalized for Roth Catch-Up Contributions in 401(k) Plans

·       National Law Review: Treasury, IRS Issues Final Regulations on Mandatory Roth Catch-Up Contribution Ahead of January 1, 2026

·       National Law Review: IRS Releases 2026 Limits for Health Savings Accounts and High-Deductible Health Plans

·       Vedder Price: Treasury and IRS Finalize Regulations for Roth Catch-Up Contributions Under SECURE 2.0

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