New Year, New Limits

A new calendar year brings new opportunities to strengthen your retirement savings and be more intentional with tax planning. Each year, the Internal Revenue Service (IRS) adjusts contribution limits for retirement plans, and these updates directly impact your savings strategy. 

Below is a summary of the new contribution limits for Traditional IRAs, Roth IRAs, SIMPLE IRAs, SEP IRAs, and employer-sponsored plans such as 401(k), 403(b), and 457 plans, along with updated catch-up provisions for individuals aged 50 and older.

Traditional IRA & Roth IRA

For 2026, the contribution limit for both Traditional and Roth IRAs has increased to $7,500 for individuals under age 50. For those aged 50 and older, the catch-up contribution limit has increased to $1,100, bringing the total allowable contribution to $8,600.

Eligibility to deduct Traditional IRA contributions or contribute to a Roth IRA is subject to income limits based on modified adjusted gross income (MAGI).

Phase-Out Ranges

• Traditional IRA (Deductibility):

  • Single filers covered by a workplace retirement plan: MAGI between $81,000 and $91,000

  • Married filing jointly, spouse covered by a workplace plan: $129,000 to $149,000

  • Married filing jointly, spouse not covered by a workplace plan: $242,000 to $252,000

• Roth IRA (Contribution Eligibility):

  • Single filers: MAGI between $153,000 and $168,000

  • Married filing jointly: $242,000 to $252,000

SIMPLE IRA

The SIMPLE IRA contribution limit for 2026 will increase to $17,000 for employees under age 50, up from $16,500 in 2025. Individuals aged 50 and older may contribute an additional $4,000 as a catch-up contribution, for a total of $21,000.

Those in the “super” catch-up age range of 60–63 are eligible for a $5,250 catch-up contribution, allowing a total contribution of $22,250.

SIMPLE IRAs are particularly beneficial for small businesses and self-employed individuals, as they provide an easy way to save for retirement. Unlike 401(k), 403(b), and 457 plans, SIMPLE IRA catch-up contributions are not required to be made as Roth contributions for high-earning employees.

SEP IRA

SEP IRA contribution limits are based on a percentage of compensation, with a maximum contribution of $72,000 for 2026, up from $70,000 in 2025. SEP IRAs do not allow catch-up contributions.

401(k), 403(b), and 457 Plans

In 2026, the contribution limit for these plans will increase to $24,500 for individuals under age 50.

• Age 50 and older: $8,000 catch-up contribution

• Ages 60–63: eligible for a “super” catch-up contribution of $11,250

Employees whose 2025 FICA wages (Box 3 of Form W-2) exceed $150,000 will be required to designate all catch-up contributions as Roth contributions. Employers must offer a Roth option for these employees to make catch-up contributions.

Defined Benefit Plans

For 2026, the limit on the annual benefit payable from a defined benefit plan is $290,000.

Trump Accounts

Trump Accounts are non-Roth accounts created under the One Big Beautiful Bill Act from 2025. They are available to individuals who are under age 18 as of the last day of this year.

• Annual contribution limit: $5,000, funded by parents, relatives, or employer plans

• Employer plans may contribute up to $2,500 of the annual $5,000 limit

• The $5,000 limit is subject to future inflation adjustments

Individuals born between January 1, 2025, and December 31, 2028, are eligible to receive a $1,000 government contribution. Additional funds may be available for residents of certain states. Accounts are expected to be available beginning in July 2026.

No distributions may be taken before the beneficiary reaches age 18. Eligible investments must be a mutual fund or ETF that tracks a qualified index and has annual fees of no more than 1%. Contributions cannot be made in the year the beneficiary turns 18.

Trump accounts are new and the rules are still evolving so implementation details may change.

Conclusion

A new year and higher contribution limits present an excellent opportunity to strengthen your retirement savings strategy and consider your tax planning opportunities. As these limits increase, it’s important to review your current plan and consider maximizing your contributions, especially if you’re approaching retirement.

Lake Tahoe Wealth Management recommends consulting with a CPA or Enrolled Agent (EA) regarding tax-specific considerations. As always, please contact your Lake Tahoe Wealth Management financial planner to discuss the most effective strategies for saving for your future or to address any questions you may have.