You can contribute even more to your 401(k) and IRA in 2026

The IRS said on Thursday that it is bumping up 401(k) contribution limits to $24,500 next year, a $1,000 increase from its current level.

The newer limit also applies to other retirement savings plans, such as the federal Thrift Savings Plan and governmental 457 plans. Meanwhile, the limit for IRA contributions is $7,500 in 2026, up from $7,000 this year.

For older workers aged 50 and above, the new “catch-up” contribution limit is $8,000 for most retirement savings plans including the 401(k). The change allows them to build savings at a faster clip since they might have started later in their working lives.

The 401(k) is the most popular retirement plan, with many employers electing to contribute to their employees’ plans. In 401(k) plans, workers set aside part of their paycheck and put it into the account. It’s not taxable until the cash is withdrawn from the 401(k) plan.

The median account balance varies by age group, with older employees typically having a bigger nest egg saved since they’ve spent more time in the workforce.

The median balance for a worker in the 25-34 age group stands at $16,255, according to data collected by Vanguard. For workers approaching retirement age in the 55-64 age group, the median 401(k) balance stands at $95,642.

The Trump administration is proceeding with similar savings plans for newborns, known as “Trump accounts,” which will be seeded with $1,000 in federal cash for children born from 2025 until the end of 2028 — the duration of the president’s second term. Beneficiaries are able to withdraw part of the cash starting at age 18 under certain circumstances such as paying for college.