Contribution Limit

Contribution limit is the maximum amount of money the IRS permits a person to put into a specific tax-advantaged account — a 401(k), an IRA, a SEP IRA, or a similar plan — in a single calendar year. The limit is set separately for each account type, it applies per person rather than per account for accounts of the same type, and it typically rises from year to year as the IRS adjusts for inflation.

The IRS publishes updated limits each year, and the changes usually take effect for the following calendar year. For 2026, the employee elective deferral limit for 401(k), 403(b), and 457(b) plans (including the Thrift Savings Plan) is $24,500, up from $23,500 in 2025. That limit is shared across all the workplace plans you contribute to in a given year — if you switch jobs mid-year, your deferrals at both employers count toward the same cap. On top of it, savers age 50 and older can contribute an additional $8,000 catch-up, and those who turn 60, 61, 62, or 63 during the year get a larger $11,250 "super" catch-up in place of (not in addition to) the regular catch-up. Those catch-up figures are part of the limit table, so they sit here; who actually qualifies for them, and the newer conditions attached to claiming one, are the subject of the catch-up contribution entry. A separate, higher limit governs the combined total of employee deferrals, employer contributions (like a match or profit sharing), and after-tax contributions to a single workplace plan: $72,000, plus any catch-up. This is the ceiling that matters most for business owners funding a Solo 401(k) or for strategies like the mega backdoor Roth. IRA contribution limits are lower and separate from workplace-plan limits — $7,500, or $8,600 with the $1,100 catch-up at 50 and older — and that limit is shared across all of a person's traditional and Roth IRAs combined, not one cap per account. Other accounts, like SEP IRAs, SIMPLE IRAs, and health savings accounts, each have their own limit structure, published on the same annual schedule.

Two rules cut across the whole table and cause most of the accidental over-contributions. Limits are per person, not per account: opening a second IRA or a second brokerage buys no extra room. And the workplace elective deferral limit is shared across employers, not reset by a job change — if you defer $15,000 at one employer and start a new job in August, only the remainder of the annual cap is available in the new plan. Neither payroll department can see the other's contributions, so in a job-change year the tracking is entirely on you. The 415(c) combined limit works differently: it applies separately to each unrelated employer's plan, which is why someone with a W-2 job and genuine self-employment income can have two of them.

Most limits reset on January 1 and apply to contributions made during that calendar year (IRA contributions get extra flexibility — you can make a given year's IRA contribution as late as the following tax filing deadline). Payroll deferrals into a workplace plan are tracked by the plan administrator, but if you have more than one employer's plan in the same year, it's on you to track the combined total yourself. A hypothetical example: Marcus, 61, works for an employer that offers a 401(k) with a match. In 2026 he can defer up to $24,500 from his paycheck, plus the $11,250 age-60-to-63 super catch-up, for $35,750 of his own money. His employer's match adds on top of that, and the combined total of his $24,500 regular deferral, his employer's match, and any after-tax contributions cannot exceed $72,000 for the year — the $11,250 catch-up doesn't count against that $72,000 ceiling; it's added on top of it. Separately, Marcus can also contribute up to $7,500 to a traditional or Roth IRA (subject to income rules for the Roth), because the IRA limit is independent of his 401(k) limit.

Pros

• Guarantees a floor of tax-advantaged saving space for every worker, regardless of income, with extra room for those catching up later in their career.
• Separate limits by account type mean many savers can shelter more than one limit's worth of money in the same year (e.g., a 401(k) and an IRA).
• Predictable annual adjustments make long-term saving plans easier to forecast.

Cons

• The caps constrain high earners and business owners who could otherwise save more, particularly the self-employed funding a Solo 401(k) or SEP IRA off variable income.
• Tracking limits across multiple accounts and, in a job-change year, multiple employers takes real attention — it's easy to over-contribute by accident.
• Limits don't always keep pace with an individual's actual capacity or need to save, especially for someone starting late.