2026 Cost of Living Adjustments (COLA) and Retirement Plan Deferral & Benefit Limits
As we enter 2026, several important updates have been announced that may impact your financial and retirement planning. This includes the latest Cost of Living Adjustments (COLA) as well as changes to retirement plan contributions and benefit limits. Below is a summary of the key highlights to help you stay informed and plan ahead.
MEDICARE PART B PREMIUM
The standard monthly premium for Medicare Part B enrollees will be $202.90 for 2026, an increase of $17.90 from $185.00 in 2025.
SOCIAL SECURITY
Social Security benefits will increase 2.8 percent in 2026. The 2.8 percent cost-of-living adjustment (COLA) will begin with benefits payable starting January 2026.
RETIREMENT PLANS
New IRS 2026 limits for retirement plans - see per plan details below:
Defined benefit plan
The lesser of the maximum dollar limitation for annual benefits under defined benefit plans or 100% of the participant’s average compensation for their highest earning three years for 2026 is $290,000.
Defined Contribution plan 415 dollar limit
The lesser of the dollar limitation for annual additions under defined contribution plans or 100% of compensation for 2026 is $72,000.
401(k) and 403(b) elective deferral limit
All elective deferrals (including designated Roth contributions) in a tax year made by a participant to 401(k) or 403(b) can total a maximum of $24,500.
457 deferral limit
The lesser of the limitation on vested contributions to 457 plans or 100% of includible compensation in 2026 is $24,500.
403(b) limit, including 15 years of service catch-up
The maximum available 402(g) elective deferral limit plus the Special Catch-up election for employees participating in a 403(b) tax deferred annuity who have had at least 15 years of service with an educational organization, hospital, home health agency, health and welfare service agency, church or convention or association of churches in 2026 is $27,500.
Note: The additional 403(b) special catch-up of up to $3,000 per year cannot exceed cumulatively $15,000 over the lifetime of the 403(b) participant.
Special 457 Catch-up limit
The Special Catch-up election for employees participating in an eligible 457 deferred compensation plan who have elected the special catch-up available in the three years prior to the year of normal retirement age. The annual additional amount available under a Special 457 Catch-up for an eligible participant is the lesser of (1) twice the current deferral limit, or (2) the sum of the current deferral limit plus the underutilized amount from prior years for a total of $49,000.
Note: The participant in a governmental 457(b) plan may make catch-up contributions in a year equal to the greater of (1) the amount permitted under the Age 50+ Catch-up, or (2) the amount permitted under the Special 457 Catch-up.
Age 50+ Catch-up limits (401(k), 403(b) and governmental 457(b) Plans)
The Special Catch-up available for individuals at least 50 years old to make eligible pre-tax (and/or designated Roth) contributions to 401(k), 403(b) and governmental 457 plans in 2026 is $8,000.
**Important note: with respect to participants whose FICA wages in the prior year exceeded $150,000 paid by the employer sponsoring a 401(k), 403(b) or governmental 457(b) plan, they have exceeded the dollar amount under the “Roth catch-up Threshold” which is used to determine whether an individual’s catch-up contributions to 401(k), 403(b), or governmental 457(b) plan, must be designated as Roth contributions in 2026.
Increased catch-up limit for participants between ages 60-63 (401(k), 403(b) and governmental 457(b) Plans)
The increased catch-up available for individuals at least 60 years old and not more than 63 years to make eligible pre-tax (and/or designated Roth) contributions to 401(k), 403(b) and governmental 457 plans in 2026 is $11,250.
IRA annual contribution limit
Total annual contributions may be made by an individual, aggregating all traditional and Roth IRAs they own in 2026 is $7,500. Note: Federal individual income tax filing status and adjusted gross income determine the deductibility of annual contributions to a traditional IRA and eligibility to contribute to a Roth IRA.
Age 50+ Catch-up limit (IRAs)
The special catch-up for individuals at least 50 years old in 2026 is $1,100 for a total maximum contribution of $8,600.
Definition of key employee
The compensation threshold used for determining key employees in 2026 is $235,000.
Definition of highly compensated employees
The compensation threshold used for determining highly compensated employees in 2026 is $160,000.
Deferral limit for SIMPLE retirement accounts
Annual contribution limit for employee deferrals to a SIMPLE retirement plan increased in 2026 to $17,000.
Age 50+ Catch-up limit for SIMPLE retirement accounts
The Special Catch-up available for individuals who are at least 50 years old increased in 2026 to $4,000.
Increased catch-up limit for participants ages 60-63 (SIMPLE retirement accounts)
The increased catch-up available for individuals at least 60 years old and not more than 63 years old increased in 2026 to $5,250.
Compensation for SEPs
Compensation taken into account to determine eligibility for simplified employee pensions (SEPs) in 2026 is $800.
Taxable Wage Base
The maximum amount of earnings subject to payroll tax in 2026 is $184,500.
***content has been edited for accuracy on 1/14/2026***
Sources:
- https://www.ssa.gov/cola/
- https://www.cms.gov/newsroom/fact-sheets/2026-medicare-parts-b-premiums-deductibles
- https://www.voya.com/voya-insights/2026-cost-living-adjustments-cola-and-retirement-plan-limits?utm_source=sfmc&utm_medium=email&utm_campaign=CM_Existing_INT_Voya_Lately_120325&sfmc_id=36097906&j=183214&mid=7302978&u=3899512&jb=1015
- https://401kspecialistmag.com/2026-medicare-part-b-increase-to-eat-up-much-of-social-security-cola-raise/