A four-year window now allows many workplace-plan participants to add $11,250 beyond the regular 2026 deferral limit, creating the largest catch-up just before traditional retirement age. The amount is determined by age at year-end, not by when a birthday or contribution occurs. Its value also depends on plan design and a separate Roth rule that can remove the current-year tax deduction for higher-paid workers.
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The special tier sits above the regular $24,500 limit
IRS Notice 2025-67 sets the ordinary 2026 elective-deferral limit at $24,500 and the age-50 catch-up at $8,000. A participant who turns 60, 61, 62 or 63 during 2026 instead receives the higher $11,250 catch-up in a 401(k), 403(b), governmental 457 plan or federal Thrift Savings Plan that permits catch-ups. The special tier replaces the ordinary catch-up for that year rather than stacking on top of it.
The age test creates sharp edges. Someone who turns 60 on December 31 can use the higher tier for the full year, while someone who turns 64 on that date falls back to the ordinary age-50 amount. The law defines an annual age band rather than prorating the limit by the number of months spent inside it.
Combining the regular and special limits produces potential employee deferrals of $35,750, before employer contributions. That is a ceiling, not a promise from every plan. Employers must operate their documents and payroll systems to accept catch-ups, and compensation earned late in the year can limit how much a participant is practically able to defer. Plan payroll cutoffs can close before the final calendar day even though the statutory limit is annual.
SIMPLE plans use a different catch-up amount
The IRS limit announcement distinguishes the common employer plans from SIMPLE arrangements. Participants ages 60 through 63 in a SIMPLE IRA or SIMPLE 401(k) generally have a $5,250 special catch-up for 2026, not $11,250. Applying the larger amount to every workplace account would overstate the legal limit. SIMPLE plans also carry lower regular salary-reduction limits, reinforcing the plan-type distinction.
The catch-up also belongs to the participant’s aggregate deferrals under applicable coordination rules. Holding two 401(k) accounts does not normally double the individual limit, and payroll systems at separate employers may not know what the other has accepted. The statutory room follows the worker, even when contributions pass through more than one plan. Excess deferrals can require a corrective distribution after year-end and undo part of the intended tax treatment.
Employer matching formulas can interact with the higher deferral but do not transform the catch-up itself. A plan may match part of the contribution, cap the match or calculate it per pay period. The $11,250 figure describes employee tax-advantaged contribution capacity; the plan document determines whether additional employer dollars follow. A year-end true-up provision can restore matches missed when contributions were concentrated early in the year.
The Roth mandate can change when the tax benefit arrives
Beginning in 2026, certain higher-paid participants must make catch-up contributions as designated Roth contributions. The IRS’s Roth catch-up guidance uses prior-year FICA wages from the employer sponsoring the plan and a 2025 wage threshold of $150,000 for determining 2026 treatment. Workers below the threshold can generally retain the plan’s available tax-character choices.
A Roth catch-up uses after-tax dollars, so it does not reduce current taxable wages in the way a pretax contribution does. The contribution can still receive tax-favored growth and potentially qualified tax-free distributions later. The new age tier therefore expands how much can enter the plan without guaranteeing an immediate income-tax deduction for every eligible participant. Qualified Roth treatment also requires the distribution rules for age and holding period to be satisfied.
The four-year catch-up window is designed to increase savings capacity when retirement is close, but its economic effect is split across three decisions: whether the plan permits the contribution, which dollar limit applies to that plan type and whether the catch-up must be Roth. Age opens the larger space; payroll and tax-character rules determine what actually fills it.
This article was created with AI assistance and reviewed for accuracy against current IRS retirement-plan limits.
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