The information in this article is up to date for tax year 2026 (returns filed in 2027).
Saving for retirement can feel a bit like climbing a mountain. There are lots of paths to take, and the journey can seem daunting. Two popular paths are IRAs and 401(k) plans. These are both types of retirement accounts, and there are other accounts as well, such as Roth IRAs and various employer-sponsored plans. Each of these accounts offers different contribution limits and tax benefits, making it important to understand how much you can contribute to maximize your savings. It’s essential to be aware of the annual contributions you can make to each account and the maximum amount allowed each year, as this helps you take full advantage of tax benefits and savings opportunities. In this article, we’ll break down the IRA and 401(k) contribution limits for 2026 so you can make sure you’re saving as much as possible for the future.
What is an IRA?
An IRA, or Individual Retirement Account, is a retirement savings account that lets you invest money for your future while enjoying tax benefits. There are two main types of IRAs: Traditional IRAs and Roth IRAs.
- Traditional IRA: Contributions are tax-deductible, meaning you may be able to claim a deduction on your tax return, and you pay taxes when you withdraw the money in retirement.
- Roth IRA: Contributions are made with after-tax dollars, which means your investment growth and qualified withdrawals are tax-free.
The amount you can contribute to either type of IRA depends on several factors, including your earned income, tax filing status, and overall eligibility. While there’s no age limit for contributing to a Traditional IRA, the ability to deduct those contributions may phase out at higher income levels. For Roth IRAs, income limits determine whether you can contribute and how much. To figure out your eligibility, the IRS uses your modified adjusted gross income (MAGI), which starts with your adjusted gross income and adds back certain deductions, such as IRA contributions or tuition expenses. These rules help determine whether you qualify for Roth contributions, Traditional IRA deductions, or both.
2026 IRA contribution limits
For 2026, the IRA contribution limit is set at $7,500 for individuals under 50 years old; this is the maximum contribution you can make for the year. If you’re age 50 or older, you can add an extra $1,100 as a catch-up contribution, bringing your total to $8,600. IRA limit increases are typically announced each year and may change based on inflation or new legislation. However, the amount you can contribute may be limited by your income or if you participate in a workplace retirement plan. The same limit applies whether you’re contributing to a Traditional IRA or a Roth IRA.
Spousal IRAs: Contribution options for non-working spouses
If you’re married and one spouse doesn’t earn income, a spousal IRA is an effective way to boost your household’s retirement savings. It allows a non-working spouse to contribute to a Traditional or Roth IRA, even without their own earnings, as long as the couple files a joint tax return and the working spouse has enough earned income to cover both contributions.
For 2026, each spouse can contribute up to $7,500 if under age 50, or $8,600 if age 50 or older (including catch-up contributions). These limits apply to both Traditional and Roth IRAs, but together the couple’s total contributions cannot exceed the working spouse’s earned income or the IRS annual limits, whichever is lower.
Tax deductibility and income limits
Whether your Traditional IRA contribution is tax deductible depends on your modified adjusted gross income (MAGI), filing status, and whether either spouse is covered by a workplace retirement plan.
- If neither spouse is covered by a retirement plan at work, Traditional IRA contributions are fully deductible.
- If the working spouse is covered, deductibility may phase out as your MAGI increases.
Roth IRAs work differently. Contributions are not tax deductible, but they offer tax-free growth and tax-free withdrawals in retirement. However, your ability to contribute is subject to MAGI-based income limits. If you exceed the limit, your contribution amount may be reduced or eliminated.
Why spousal IRAs matter
Spousal IRAs allow non-working spouses to build their own retirement savings and access the same tax advantages available to working spouses. It’s a powerful strategy for couples looking to maximize retirement contributions and ensure both partners have long-term financial security.
To get the most out of spousal IRAs, it’s important to understand contribution limits, tax rules, and eligibility requirements. A financial advisor can help you map out a plan that fits your household. And remember, this strategy can be used alongside workplace plans like 401(k)s to further expand your retirement savings.
By coordinating your contributions across all available retirement plans, you can make the most of today’s tax advantages and build a stronger financial future together.
As you plan your contributions for 2026, don’t forget to review important year-end IRA reminders.
What is a 401(k)?
A 401(k) is a retirement plan offered by employers to help their employees save for retirement. It’s one of the best ways to invest because you can make automatic contributions from your paycheck. There are two main types of 401(k) plans:
- Traditional 401(k): Contributions are made before taxes, lowering your taxable income in the year you contribute. You won’t pay any taxes until you withdraw the funds in retirement.
- Roth 401(k): Contributions are made with after-tax dollars, but qualified withdrawals are tax-free.
Self-employed individuals or small business owners may consider a SEP IRA as an alternative retirement savings plan, which has its own contribution limits.
One of the biggest perks is that your employer may offer a 401(k) match, which is essentially free money. Make sure you take full advantage of this benefit if it’s available.
2026 401(k) contribution limits
The contribution limit for a 401(k) is much higher than an IRA. For 2026, the 401(k) contribution limit is set at $24,500. If you’re over 50, you can also make a catch-up contribution of $8,000, bringing your total to $32,500. Thanks to a recent change in SECURE 2.0, a higher catch-up contribution limit now applies to employees aged 60-63 who participate in a 401(k) plan. They can make catch-up contributions up to $11,250. The higher limit lets you save a lot more for retirement, especially if you start later in life.
Keep in mind that certain contribution limits or eligibility rules may differ for married couples filing jointly, as income thresholds and requirements can vary for those filing jointly compared to single filers.
Learn how a 401(k) can help you build wealth.
Important Things to Remember
- The contribution limits can change each year based on inflation. So, always check the latest IRA and 401(k) contribution limits to ensure you do not exceed the maximum amount allowed.
- Contributions must be made by the tax filing deadline (typically April 15 of the following year) for the current tax year. Be sure to track which year’s limit you are contributing toward.
- Making excess contributions to your IRA or 401(k) can result in penalties. If you contribute more than the maximum amount, withdraw the excess contributions promptly to avoid additional taxes.
- Don’t forget about penalties! Withdrawing funds from an IRA or a Traditional 401(k) before age 59 ½ typically results in a 10% penalty unless you qualify for an exception. Make sure you plan accordingly.
- Start saving as early as you can. The sooner you begin contributing to an IRA or 401(k), the more time your money has to grow. Experts recommend saving 10% to 15% of your pre-tax income each year.
Strategies to Max Out Your Retirement Contributions
Maximizing your retirement contributions can feel challenging, but with the right strategies, you can make the most of your savings potential. Here are some effective approaches to help you reach the 401k contribution limit and IRA contribution limits for 2026:
- Automate your contributions
Set up automatic payroll deductions or bank transfers to your retirement accounts. Automating contributions ensures consistency and helps you steadily build your retirement fund without having to think about it each month. - Prioritize employer-sponsored plans
If your employer offers a 401(k) match, contribute at least enough to get the full match. This is essentially free money and can significantly boost your retirement savings over time. - Take advantage of catch-up contributions
If you are age 50 or older, be sure to use catch-up contributions to increase your annual limits. For 2026, this means an extra $1,100 for IRAs and up to $8,000 (or $11,250 if aged 60-63) for 401(k) plans. - Coordinate contributions between accounts
If you contribute to both a Traditional IRA and a Roth IRA, remember the total combined contributions cannot exceed the annual IRA contribution limit. Plan your contributions accordingly to maximize tax benefits. - Consider spousal IRAs
Married individuals filing jointly can contribute to spousal IRAs even if one spouse has little or no earned income. This strategy can effectively double your household’s retirement savings potential. - Monitor your modified adjusted gross income (MAGI)
Your eligibility to contribute to Roth IRAs and the deductibility of Traditional IRA contributions can depend on your MAGI. Keep an eye on your income and tax filing status to optimize your contributions and tax benefits. - Increase contributions gradually
If maxing out contributions feels overwhelming, start by increasing your contributions a small percentage each year. Even a 1-2% increase annually can add up significantly over time. - Utilize tax refunds or bonuses
Consider directing any tax refunds, work bonuses, or other windfalls directly into your retirement accounts to boost your savings without affecting your regular budget. ezTaxReturn makes it easy to get your biggest possible refund, guaranteed.
By implementing these strategies, you can make the most of your retirement plan’s contribution limits, grow your savings tax-efficiently, and work towards a more secure financial future.
Wrapping It Up: Your Retirement Savings Journey
Understanding the IRA and 401(k) contribution limits is essential for anyone serious about saving for retirement. Whether you’re saving through an IRA or a 401(k), it’s important to take full advantage of the tax benefits each offers. By contributing the maximum allowable amount, you can significantly boost your retirement savings over time – and lower your tax bill in the process. When deciding how much to contribute and which accounts to use, be sure to consider your investment objectives to ensure your choices align with your long-term financial goals.
As you focus on building your retirement savings, remember that filing your taxes correctly is just as important for your financial success. ezTaxReturn makes it easy to file your taxes online and claim all the money-saving deductions or credits you deserve.
Frequently Asked Questions (FAQs)
What is the 401k contribution limit for 2026?
For 2026, the 401k contribution limit is $24,500. If you are age 50 or older, you can make additional catch-up contributions up to $8,000, or up to $11,250 if you are between ages 60 and 63, depending on your plan.
Can I contribute to both a Traditional IRA and a Roth IRA in the same year?
Yes, you can contribute to both types of IRAs in the same tax year, but your total combined contributions cannot exceed the annual IRA contribution limit, which is $7,500 for individuals under 50 in 2026, plus catch-up contributions if eligible.
What determines eligibility to contribute to a Roth IRA?
Eligibility to contribute to a Roth IRA depends on your modified adjusted gross income (MAGI) and tax filing status. If your income exceeds certain IRS limits, your ability to contribute to a Roth IRA may be reduced or eliminated.
Can a non-working spouse contribute to an IRA?
Yes, a non-working spouse can contribute to a spousal IRA as long as the couple files a joint tax return and the working spouse has enough earned income to cover both contributions.
What happens if I contribute more than the allowed limit?
Excess contributions to your IRA or 401(k) can result in penalties. It’s important to withdraw any excess contributions promptly to avoid additional taxes and penalties.
Are contributions to a Traditional IRA tax deductible?
Contributions to a Traditional IRA may be tax deductible depending on your income, tax filing status, and whether you or your spouse participates in a workplace retirement plan. Deductibility phases out at higher income levels.
When is the deadline to make contributions for a tax year?
Contributions for a tax year must typically be made by the tax filing deadline of the following year, usually April 15.
What is taxable compensation for IRA contributions?
Taxable compensation generally includes wages, salaries, tips, and other income earned from working. It is required to be eligible to make IRA contributions.
How does filing status affect IRA contribution limits?
Your tax filing status (e.g., single, married filing jointly) affects your eligibility and income limits for IRA contributions, especially for Roth IRAs and the deductibility of Traditional IRA contributions.
Can I contribute to a 401(k) if my spouse participates in one?
Yes, you can contribute to your own 401(k) plan regardless of whether your spouse participates in a 401(k). However, your combined contributions are subject to individual limits.
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The articles and content published on this blog are provided for informational purposes only. The information presented is not intended to be, and should not be taken as legal, financial, or professional advice. Readers are advised to seek appropriate professional guidance and conduct their own due diligence before making any decisions based on the information provided.
