Retirement Contribution Limits: How They Are Set and Indexed

Key Takeaways

Direct answer: A retirement contribution limit is a statutory base amount plus accumulated indexation. The Internal Revenue Code section that creates the limit also names the index, the base period and the rounding step, so the annual figure is computed rather than chosen. Workplace plan limits run on the section 415(d) method and a September measurement quarter; IRA, Roth and health savings account amounts run on the section 1(f)(3) chained-price method; the Social Security wage base runs on wages rather than prices under a separate statute entirely.

• This guide deliberately contains no dollar figures. A page that restates the current year's numbers is wrong the day the next annual adjustment is announced, and a stale retirement limit is a costly thing for a reader to act on. Every current figure is one link away, on the page maintained by the body that publishes it.
• The base amounts still written in the statute are historical anchors, not current amounts. Internal Revenue Code section 415(c)(1)(A) still reads the figure Congress wrote alongside a base period of the calendar quarter beginning July 1, 2001. Everything above that anchor is accumulated indexation.
• Rounding is applied to the cumulative computation, not compounded year over year, so an increase rounded away in one year is not lost. It reappears once the running total crosses the next increment.
• Limits that look like they should move together often do not, because they sit in different statutes with different indexes and different steps.
• Catch-up rules differ by plan type by design: age 50 under section 414(v), a four-year window at ages 60 through 63, a fifteen-year service rule unique to 403(b), a three-year pre-retirement rule unique to 457(b), age 55 for health savings accounts, and no indexing at all for that last one.
• Contribution limits and tax treatment are separate subjects. This page covers how the numbers are produced. Swoopr Investment's Investment Account Types library covers how each account is taxed.

Who Actually Sets a Retirement Contribution Limit?

Congress sets it. Every limit discussed on this page exists because a specific section of the Internal Revenue Code names a dollar amount, and a neighbouring subsection of the same statute says how that amount is adjusted for inflation. The IRS computes and publishes the adjusted figures each year, but it is applying a formula, not exercising judgement about the amount.

That distinction has practical consequences. It means an annual figure can be worked out from published index data before the IRS announces it. It means a limit cannot be changed outside the formula without legislation, which is why changes such as the higher catch-up window for ages 60 through 63 arrived through the SECURE 2.0 Act rather than through an IRS decision. And it means the authoritative place to read a current number is the agency page that publishes the computation, not a summary that copied it.

The base amounts left behind in the statute make the point vividly. Internal Revenue Code section 415 still carries the annual additions figure Congress wrote more than two decades ago, together with a base period of the calendar quarter beginning July 1, 2001. Nobody has edited that number since, because nobody needs to. Section 415(d) does the updating.

What Index Is Each Limit Tied To?

Three separate indexing systems govern the amounts a retirement saver deals with, and they do not measure the same thing over the same window.

1. The section 415(d) method covers workplace plan limits. Section 415(d)(2)(A) bases the adjustment on the increase in the applicable index for the calendar quarter ending September 30 of the preceding calendar year, measured against that limit's base period. Section 415(d)(2)(B) directs that the adjustment procedures be similar to those used to adjust Social Security benefit amounts under section 215(i)(2)(A) of the Social Security Act. The Social Security Administration computes benefit adjustments from the Consumer Price Index for Urban Wage Earners and Clerical Workers, comparing third-quarter averages, which is why workplace plan limits are anchored to a September window rather than a calendar year.
2. The section 1(f)(3) method covers IRA, Roth and health savings account amounts. Since the Tax Cuts and Jobs Act rewrote it, section 1(f) uses the Chained Consumer Price Index for All Urban Consumers, defined at section 1(f)(6) and averaged over the twelve-month period ending August 31 under section 1(f)(4). A chained index reflects consumers substituting between goods as relative prices change, and it therefore tends to rise a little more slowly than the unchained series.
3. The national average wage index covers the Social Security contribution and benefit base. This one is not a price index at all. It tracks average wages, and it reaches the base through a formula in section 230 of the Social Security Act rather than through the tax code.

The consequence worth internalizing is that a workplace deferral limit and an IRA limit are not two views of the same inflation number. They are two different measurements, taken over two different windows, of two different statistical series. In a year when they move by different proportions, nothing has gone wrong.

Why Do Some Limits Move in Five-Hundred-Dollar Steps and Others in Thousands?

Because each limit carries its own rounding rule, and the rule sits in the same subsection that creates the adjustment. Section 415(d)(4)(A) sets the default: an increase that is not a multiple of five thousand dollars is rounded down to the next lower multiple of five thousand dollars. That subparagraph then extends itself to any other provision in the tax code that adopts the section 415(d) method, except to the extent that provision says otherwise.

Several provisions do say otherwise, and the overrides are what produce the different step sizes a reader notices from one limit to the next:

• One thousand dollars for the defined contribution annual additions limit, under section 415(d)(4)(B).
• Five hundred dollars for elective deferrals under section 402(g)(4), for catch-up contributions under section 414(v)(2)(C), for SIMPLE plan deferrals under section 408(p)(2)(E)(iii) and for 457(b) deferrals under section 457(e)(15)(B). Each of these rounds down.
• One hundred dollars for the IRA catch-up amount under section 219(b)(5)(C)(iii), the finest step attached to any contribution limit.
• Fifty dollars for the minimum compensation threshold that makes an employee eligible for a simplified employee pension, under section 408(k)(9), and for health savings account amounts under section 223(g)(2).
• Three hundred dollars for the Social Security contribution and benefit base, under section 230 of the Social Security Act.

Rounding direction matters as much as step size. The retirement plan limits round down to the next lower multiple, so they can never overshoot. The income phase-out thresholds for Roth contributions and traditional IRA deductions round to the nearest multiple of one thousand dollars, under sections 408A(c)(3)(D) and 219(g)(8), so they can round upward. Health savings account amounts and the Social Security wage base also round to the nearest multiple. Two limits facing identical inflation can therefore move in the same year, in one year only, or by visibly different proportions, purely because of these rules.

A common worry follows from round-down rules: does a year with no visible increase permanently lose that inflation? It does not. Section 415(d)(2)(A) compares the index for the quarter ending September 30 against the index for the base period, not against the previous year. The computation is therefore cumulative, rounding is applied once at the end of it, and the fraction that got rounded away is still inside next year's calculation.

Which Statute Sets Which Limit

The table below is the reference core of this page. It names, for each limit, the statute that creates it, the statute that indexes it, and the rounding step that decides how visibly it moves. It contains no dollar amounts on purpose. For the current figures, see the IRS page on COLA increases for dollar limitations on benefits and contributions.

How Are the 401(k) Elective Deferral and Annual Additions Limits Set?

A 401(k) participant is subject to two separate ceilings that people frequently merge into one. They come from different statutes, count different things, and apply at different levels.

The elective deferral limit lives in Internal Revenue Code section 402(g)(1). It caps what an individual may defer from salary, and it follows the individual rather than the plan. Section 402(g)(3) defines the deferrals it counts: contributions under a 401(k) arrangement, salary-reduction contributions to a 403(b) annuity, salary-reduction simplified employee pension contributions, and SIMPLE IRA elective contributions. Somebody who changes jobs mid-year, or works two jobs, gets one limit across all of them, not one per employer. Section 402(g)(4) indexes the amount using the section 415(d) method from a base period of the calendar quarter beginning July 1, 2005, rounded down to a five-hundred-dollar multiple.

The annual additions limit lives in section 415(c)(1). It caps everything credited to a participant's account in a defined contribution plan for the year, which means employee deferrals plus employer matching and non-elective contributions plus reallocated forfeitures, at the lesser of the statutory dollar amount or one hundred percent of the participant's compensation. Unlike the deferral limit it applies per employer, with related employers treated as one under the controlled group and affiliated service group rules in section 414(b), (c), (m) and (o). Section 415(d) indexes it from the calendar quarter beginning July 1, 2001, rounded down to a one-thousand-dollar multiple.

A third figure constrains both. Section 401(a)(17) caps the annual compensation a plan may take into account, which limits percentage-of-pay employer contributions for high earners regardless of what the annual additions ceiling says. It is indexed by the section 415(d) method and rounds down to a five-thousand-dollar multiple, so it moves in visibly larger and less frequent jumps than the deferral limit does.

One structural detail is easy to miss and financially significant: section 414(v)(3)(A)(i) places catch-up contributions outside the limits in sections 401(a)(30), 402(h), 403(b), 408, 415(c) and 457(b)(2). A permitted catch-up therefore sits on top of the annual additions ceiling rather than inside it. For how the resulting account is taxed on the way out, see Swoopr Investment's guide to 401(k) Investing Basics: Contributions, Matching, and Tax Treatment.

Which Limits Share a Bucket and Which Do Not?

Aggregation is where most real-world confusion sits. Two limits with identical dollar figures can behave completely differently depending on what the statute says they aggregate across.

The row that surprises people most is the third. Because section 402(g)(3) simply does not list 457(b) deferrals, an employee of a state or local government with both a 403(b) and a governmental 457(b) plan works against two independent ceilings. The two dollar figures are usually identical, since section 457(e)(15)(B) copies the section 402(g) indexing method, which makes the separation easy to mistake for a shared limit.

How Are Catch-Up Contributions Set, and Why Do the Age Thresholds Differ?

Catch-up rules differ by plan type because they were legislated at different times for different purposes, and each lives in its own statute with its own age trigger.

The general workplace catch-up is in Internal Revenue Code section 414(v). Section 414(v)(5) defines an eligible participant as someone who would attain age 50 by the end of the taxable year, so eligibility begins in the calendar year of the fiftieth birthday rather than on the birthday itself. Section 414(v)(2)(B)(i) sets the amount for most plans and section 414(v)(2)(B)(ii) sets a lower amount for SIMPLE arrangements, both indexed under section 414(v)(2)(C)(i) from a base quarter beginning July 1, 2005 and rounded down to a five-hundred-dollar multiple.

The four-year window at ages 60 through 63 comes from the SECURE 2.0 Act and reads oddly in the statute for a reason. Section 414(v)(2)(B)(i) defines the higher amount by reference to a participant who "would attain age 60 but would not attain age 64 before the close of the taxable year", which is how Congress expressed a window covering ages 60, 61, 62 and 63 without listing them. Section 414(v)(2)(E) sets the amount as the greater of a fixed statutory floor or one hundred and fifty percent of the ordinary catch-up amount in effect for 2024, with the SIMPLE version referenced to 2025. From years beginning after 2025 those amounts get their own indexing, from a base quarter beginning July 1, 2024. Once a participant would attain age 64 during the year, the window closes and the ordinary amount applies again.

Section 414(v)(7) adds a condition rather than an amount. A participant whose prior-year wages from the plan sponsor, as defined in section 3121(a), exceed a statutory threshold may make catch-up contributions only as designated Roth contributions. That threshold is indexed under the section 415(d) method from a base quarter beginning July 1, 2023 and rounds down to a five-thousand-dollar multiple. Section 414(v)(7)(C) exempts arrangements described in section 414(v)(6)(A)(iv), which is to say simplified employee pensions and SIMPLE plans.

A plain simplified employee pension receives employer contributions rather than salary deferrals, so the catch-up rules have nothing to attach to. The grandfathered salary-reduction version, the SARSEP, does take deferrals and is treated at the general catch-up amount, because section 414(v)(2)(B)(ii) reduces the amount only for plans described in section 401(k)(11) or 408(p) and a SARSEP is neither.

How Are the IRA and Roth IRA Limits Set?

There is one IRA contribution limit, and it covers traditional and Roth IRAs together. Internal Revenue Code section 219(b)(5)(A) names the base deductible amount, and section 408A(c)(2) defines the Roth ceiling as that same amount reduced by whatever went into other IRAs for the year. Splitting a contribution between a traditional and a Roth IRA divides one limit; it does not create two.

Section 219(b)(5)(C)(i) indexes the amount, and it is here that IRA limits part company with workplace plan limits. The adjustment is the cost-of-living adjustment determined under section 1(f)(3), with calendar year 2007 substituted as the base, and section 219(b)(5)(C)(ii) rounds the result down to the next lower multiple of five hundred dollars. Nothing in that sentence references section 415(d). The IRA limit is measured with the chained price index over a period ending August 31, while the elective deferral limit is measured over the quarter ending September 30 by a different method entirely.

The catch-up amount for savers age 50 and over sits in section 219(b)(5)(B)(ii). It was a flat statutory figure for many years, and section 219(b)(5)(C)(iii) only began indexing it for taxable years beginning in a calendar year after 2023, from a base calendar year of 2022, rounding down to a one-hundred-dollar multiple. That is the finest step attached to any contribution limit, so this amount tends to move even in years when larger limits sit still.

Two further points shape what a saver can actually put in. A contribution requires compensation, so the limit is the lesser of the statutory amount and the individual's taxable compensation for the year, with the spousal rule at section 219(c) letting a lower-earning spouse rely on the couple's combined compensation on a joint return. And separately from the contribution limit, income can restrict Roth eligibility or deductibility, which is the phase-out mechanism below. For the choice between the two account types, see Swoopr Investment's guide to Roth IRA vs. Traditional IRA: Tax Treatment and Which to Choose.

How Does the Roth IRA Income Phase-Out Actually Work?

The phase-out is a proportional reduction of the contribution limit, not an on-off eligibility switch. Internal Revenue Code section 408A(c)(3)(A) reduces the otherwise allowable amount by the fraction whose numerator is the excess of modified adjusted gross income over the applicable dollar amount, and whose denominator is the width of the phase-out range.

The mechanism has four moving parts, and only one of them is indexed.

• The applicable dollar amount, in section 408A(c)(3)(B)(ii), is the income level where the reduction starts. It differs by filing status, and for a married individual filing a separate return it is zero. This is the indexed part: section 408A(c)(3)(D) adjusts it under section 1(f)(3) from a base calendar year of 2005, rounding to the nearest multiple of one thousand dollars rather than down.
• The range width is fixed in the statute and never indexed. Section 408A(c)(3)(A)(ii) sets it at fifteen thousand dollars generally and at ten thousand dollars for a joint return or a married individual filing separately. Because the starting threshold rises with inflation while the width stays put, the range creeps upward without widening, and the marginal rate at which each additional dollar of income reduces the allowed contribution stays constant.
• The rounding of the result comes from section 219(g)(2)(C), applied by cross-reference: an amount that is not a multiple of ten dollars rounds to the next lowest ten dollars.
• The floor comes from section 219(g)(2)(B): the allowed amount is not reduced below two hundred dollars until it is reduced to zero altogether. Someone deep in the range therefore keeps a small contribution allowance until income clears the top of the range, at which point it drops straight to nothing.

The traditional IRA deduction phase-out in section 219(g) is a parallel but distinct mechanism, with three differences worth knowing. Its range widths are ten thousand dollars for most filers and twenty thousand dollars on a joint return. It applies only when the taxpayer or the taxpayer's spouse is an "active participant" in a workplace plan, defined in section 219(g)(5). And when only the spouse is covered, section 219(g)(7) substitutes a much higher starting threshold. A quirk in that definition is worth flagging: the closing sentence of section 219(g)(5) says an eligible deferred compensation plan within the meaning of section 457(b) is not treated as a covered plan, so participating in a governmental 457(b) plan does not by itself make someone an active participant for IRA deduction purposes.

Note that these phase-outs restrict contributions and deductions, not conversions. Swoopr Investment's guide to the Backdoor Roth IRA: How High Earners Bypass Roth Income Limits covers the treatment of that route, and the Taxes and Rules library owns the tax-treatment questions generally.

How Are SIMPLE and SEP Limits Set?

The two small-employer plans are set in opposite ways. A SIMPLE plan has its own dedicated deferral limit; a simplified employee pension has no dollar limit of its own at all.

SIMPLE plans. Internal Revenue Code section 408(p)(2)(E)(i)(III) names the general applicable dollar amount, and section 408(p)(2)(E)(iii)(I) indexes it by the section 415(d) method from a base quarter beginning July 1, 2004, rounding down to a five-hundred-dollar multiple. The SECURE 2.0 Act then added a second, higher amount at section 408(p)(2)(E)(ii), defined as one hundred and ten percent of the general amount in effect for 2024. Section 408(p)(2)(E)(i)(I) makes it available to an eligible employer with no more than twenty-five employees who received at least a statutory threshold of compensation for the preceding year, and subclause (II) lets a larger eligible employer elect it. That higher amount carries its own indexing from a base quarter beginning July 1, 2023, so the two SIMPLE limits drift apart over time rather than staying in a fixed ratio. Swoopr Investment's guide to the SIMPLE IRA: Contribution Rules, Employer Requirements, and the Two-Year Penalty covers the employer-side obligations.

Simplified employee pensions. A SEP takes employer contributions only, and section 402(h)(2) caps them at the lesser of twenty-five percent of the employee's compensation or the amount in effect under section 415(c)(1)(A). There is no separate SEP figure to index, so a SEP limit moves exactly when the annual additions limit moves and inherits its one-thousand-dollar rounding step. Two other SEP figures are set independently: section 408(k)(3)(C) caps the compensation that may be counted at the section 401(a)(17) amount, and section 408(k)(2)(C) sets a minimum compensation an employee must receive to be eligible at all. Section 408(k)(9) indexes that minimum by the section 415(d) method with a fifty-dollar round-down, the finest step anywhere in this system, which is why that threshold moves in most years while the largest limits sit still. Swoopr Investment compares the self-employed options in SEP-IRA vs. Solo 401(k): Self-Employed Retirement Accounts Compared.

How Do 403(b) and 457(b) Limits Differ from a 401(k)?

A 403(b) shares the 401(k) limits almost exactly. Elective deferrals are governed by the same section 402(g) limit, annual additions by the same section 415(c) limit, and the age 50 and ages 60 through 63 catch-ups by the same section 414(v). What a 403(b) adds is section 402(g)(7), a rule with no counterpart anywhere else in the code.

Section 402(g)(7) lets a qualified organization, which the statute defines as an educational organization, hospital, home health service agency, health and welfare service agency, church, or convention or association of churches, offer an additional deferral opportunity to an employee with at least fifteen years of service with that employer. The increase is the least of three amounts: a flat annual figure, a lifetime cap reduced by amounts already used under the rule, and a service-based amount computed as a fixed figure multiplied by years of service, less prior elective deferrals. All three are written into the statute and none is indexed, so this is one of very few retirement amounts that does not move with inflation at all. Where a plan offers both, the IRS applies deferrals above the standard limit to the fifteen-year rule first and to the age 50 catch-up second. See Swoopr Investment's guide to 403(b) Plans: How They Work and How They Differ from a 401(k).

A 457(b) is the genuinely different case, and the difference is coordination rather than amount. Internal Revenue Code section 457(b)(2) caps deferrals at the lesser of the applicable dollar amount or one hundred percent of includible compensation, and section 457(e)(15)(B) indexes that amount by the same method as section 402(g). The figures therefore usually match. But section 457(c) limits deferrals only across 457 plans, and section 402(g)(3) does not list 457 deferrals in its shared bucket, so the two ceilings are independent of one another.

Three further 457(b) rules follow from the plan's structure rather than from indexing:

• Section 457(b)(3) allows a special catch-up for one or more of the participant's last three taxable years ending before normal retirement age under the plan, raising the ceiling to the lesser of twice the section 457(b)(2)(A) amount or the current ceiling plus previously unused ceiling. Its size therefore depends on how much of past years' allowance went unused, which is unlike any other catch-up.
• Section 414(v)(6)(C) prevents the age 50 catch-up from applying in any year in which the section 457(b)(3) higher limitation applies. They are alternatives within a year, not additive.
• Section 414(v)(6)(A)(iii) extends the age 50 catch-up only to a 457 plan of an employer described in section 457(e)(1)(A), meaning a State, a political subdivision, or an agency or instrumentality of either. A tax-exempt employer's 457(b) plan is outside that description and does not get the age 50 catch-up. Swoopr Investment's guide to 457(b) Plans: Governmental vs. Non-Governmental Rules Explained covers the wider governmental and non-governmental split, including the creditor-exposure difference that matters more than the contribution rules do.

The federal Thrift Savings Plan follows the 401(k) side of this picture, since it is a defined contribution plan subject to section 402(g) and section 415(c). Swoopr Investment covers its specifics in The Thrift Savings Plan (TSP): How the Federal Retirement Account Works.

How Is the Social Security Wage Base Set?

The Social Security contribution and benefit base, commonly called the taxable maximum, is not a retirement contribution limit at all, and it is worth understanding precisely because it is so often listed alongside them in the same annual announcements.

It comes from section 230 of the Social Security Act, and it is indexed to wages rather than to prices. The Social Security Administration's Contribution and Benefit Base Determination page states the formula: the base for a year after 1994 equals the 1994 base multiplied by the ratio of the national average wage index for the year two years earlier to that index for 1992, rounded to the nearest multiple of three hundred dollars, and never reduced below the current base.

Four features of that formula distinguish it from every tax-code limit on this page:

• It uses the National Average Wage Index, so it tracks earnings growth. In periods when wages outpace prices it rises faster than the price-indexed limits, and in periods when they lag it rises more slowly.
• It runs on a two-year lag, because the wage index for a year is not final until the following year. The base for any year reflects wages earned two years before it takes effect.
• It rounds to the nearest multiple, so it can round upward. Retirement plan deferral limits round down and never can.
• It applies only if a benefit cost-of-living adjustment becomes effective for December of the determination year. In a year with no benefit adjustment, the base does not change.

The benefit adjustment itself is a third distinct calculation. The Social Security Administration's Latest Cost-of-Living Adjustment page describes it as the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers from the third-quarter average of the last year in which an adjustment took effect to the third-quarter average of the current year, rounded to the nearest tenth of one percent. That third-quarter comparison is the procedure that section 415(d)(2)(B) points at, which is how a Social Security methodology ends up governing the September measurement window used for workplace retirement plan limits.

How Are HSA Limits Set, and Why Do They Arrive Earlier?

Health savings account limits are set by Internal Revenue Code section 223 and run on a calendar that is deliberately several months ahead of the retirement plan calendar.

Section 223(b)(2) sets the base monthly limitation for self-only and family high deductible health plan coverage, and section 223(c)(2)(A) sets the minimum deductible and maximum out-of-pocket amounts that make a plan a high deductible health plan in the first place. Section 223(g)(1) indexes all of them under section 1(f)(3), substituting calendar year 1997 as the base for the contribution amounts and calendar year 2003 for the high deductible health plan thresholds, and section 223(g)(2) rounds to the nearest multiple of fifty dollars.

Two sentences in section 223(g)(1) explain the earlier arrival. The first applies section 1(f)(4) by substituting March 31 for August 31, so the twelve-month measurement period ends five months earlier than the general tax-code window. The second requires the Secretary to publish the adjusted amounts no later than June 1 of the preceding calendar year. Employers need those figures during the spring health plan design cycle, months before open enrolment, which is why they are legislated onto a different clock rather than bundled with the autumn retirement plan announcement.

Two structural differences matter for anyone treating a health savings account as a retirement vehicle. The limit is monthly rather than annual: section 223(b)(1) allows the sum of the monthly limitations for the months in which the individual is an eligible individual, so mid-year eligibility changes prorate the amount rather than preserving the full annual figure. And the age 55 additional contribution amount in section 223(b)(3)(B) is a fixed statutory table that ends at a single figure for "2009 and thereafter". Section 223(g)(1) reaches the ordinary limits but not section 223(b)(3), so that catch-up has stayed at the same nominal amount for well over a decade and can only be changed by legislation. Swoopr Investment covers the account's tax profile in HSA Investing: Triple Tax Advantage.

When Is Each Year's Number Published?

Three separate publication cycles produce the figures a saver sees, and they run at different times of the year.

1. The Bureau of Labor Statistics publishes the September Consumer Price Index values in October, which completes the calendar quarter ending September 30 that section 415(d)(2)(A) measures.
2. Treasury computes each adjusted amount from its own statutory base amount and the cumulative change in the applicable index since that limit's own base period, then applies that limit's own rounding rule.
3. The IRS publishes the resulting figures in an annual notice in the Internal Revenue Bulletin during the autumn, ahead of the year they apply to, and mirrors them on its COLA increases for dollar limitations on benefits and contributions page. That page is the durable address; the notice number changes every year.
4. The Social Security Administration announces the benefit cost-of-living adjustment and the following year's Contribution and Benefit Base in October, on its own statutory basis rather than the tax code's.
5. Health savings account amounts arrive well before all of this, in a revenue procedure published no later than June 1 of the preceding calendar year, computed from a twelve-month period ending March 31.

For plan-year purposes, note that the figures are keyed to the calendar year even for plans whose plan year is not the calendar year, and that the annual additions limit under section 415(c) is applied to the limitation year defined in the plan document. Employers reconcile the two; participants generally see the calendar-year figures.

Common Mistakes and Misconceptions

• Treating the IRS as the body that decides the limit. The IRS computes and publishes. The amount and the formula are both statutory, which is why a change of policy needs legislation and why the annual announcement contains no discretion.
• Assuming every limit moves every year. A limit rounded down to a five-thousand-dollar multiple can sit unchanged through a year of real inflation while a limit rounded down to a one-hundred-dollar multiple moves in the same year. The step size explains most of the apparent inconsistency.
• Assuming the IRA and workplace limits are indexed the same way. They are governed by different statutes, measured against different indexes over different windows, and rounded differently. Expecting them to move in lockstep leads to treating a normal divergence as an error.
• Believing a rounded-down year permanently forfeits that inflation. The computation is cumulative against the base period, so the rounded-away fraction is still in next year's arithmetic.
• Counting a 457(b) deferral against the elective deferral limit. Section 402(g)(3) does not list it and section 457(c) aggregates only 457 plans. The identical dollar figures make this mistake easy to make and expensive to make.
• Treating the 403(b) fifteen-year rule and the age 50 catch-up as alternatives. Where a plan offers both they stack in a defined order, with amounts above the standard limit applied to the fifteen-year rule first.
• Assuming the health savings account catch-up is indexed. Section 223(b)(3)(B) is a fixed table with no cost-of-living provision attached to it.
• Reading a current-year figure off an undated page. Even the IRS's own topic pages can lag the annual notice. Check the date on anything that quotes a number, and prefer the page that publishes the computation.
• Confusing the Social Security wage base with a contribution limit. It is a payroll tax ceiling set by the Social Security Act, indexed to wages rather than prices, and it is announced alongside the retirement limits purely as a matter of timing.

Frequently Asked Questions

References

This guide describes United States federal rules only, and is based on the text of the Internal Revenue Code and the Social Security Act as published by the Office of the Law Revision Counsel and the Social Security Administration, together with current IRS guidance. All sources were verified in August 2026. It states no dollar figure for any limit, by design: each of the pages below is maintained by the body that publishes the number, and is the correct place to read a current amount.

• U.S. Code: 26 USC 415, Limitations on Benefits and Contribution Under Qualified Plans: the annual additions and defined benefit limits, the section 415(d) cost-of-living method, the base periods and the default rounding rule.
• U.S. Code: 26 USC 402, Taxability of Beneficiary of Employees' Trust: the elective deferral limit at 402(g)(1), the definition of elective deferrals at 402(g)(3), the indexing rule at 402(g)(4), the simplified employee pension cap at 402(h)(2), and the 403(b) fifteen-year rule at 402(g)(7).
• U.S. Code: 26 USC 414, Definitions and Special Rules: catch-up contributions at 414(v), the ages 60 through 63 window at 414(v)(2)(E), the Roth catch-up condition at 414(v)(7), and the highly compensated employee threshold at 414(q).
• U.S. Code: 26 USC 219, Retirement Savings: the IRA contribution limit and its catch-up at 219(b)(5), the indexing rules at 219(b)(5)(C), and the traditional IRA deduction phase-out at 219(g).
• U.S. Code: 26 USC 408, Individual Retirement Accounts: the SIMPLE plan applicable dollar amount at 408(p)(2)(E) and the simplified employee pension participation and compensation rules at 408(k).
• U.S. Code: 26 USC 408A, Roth IRAs: the combined contribution limit at 408A(c)(2) and the income phase-out mechanism, range widths and indexing at 408A(c)(3).
• U.S. Code: 26 USC 457, Deferred Compensation Plans of State and Local Governments and Tax-Exempt Organizations: the deferral ceiling at 457(b)(2), the three-year catch-up at 457(b)(3), the coordination rule at 457(c) and the indexing rule at 457(e)(15).
• U.S. Code: 26 USC 223, Health Savings Accounts: the monthly limitation at 223(b)(2), the unindexed age 55 table at 223(b)(3)(B), and the March 31 measurement period, June 1 publication deadline and fifty-dollar rounding at 223(g).
• U.S. Code: 26 USC 1, Tax Imposed: the general cost-of-living adjustment at 1(f)(3), the August 31 measurement period at 1(f)(4), and the definition of the chained index at 1(f)(6).
• IRS: COLA Increases for Dollar Limitations on Benefits and Contributions: the authoritative current-year figures and the notice that announced them.
• IRS: Retirement Topics, 401(k) and Profit-Sharing Plan Contribution Limits: how the elective deferral, annual additions and compensation limits interact in practice.
• IRS: Retirement Topics, Catch-Up Contributions: which plan types permit catch-ups, the ages 60 through 63 amounts, and the Roth catch-up condition for higher earners.
• IRS: Retirement Topics, IRA Contribution Limits: the combined traditional and Roth IRA limit and the compensation requirement.
• IRS: IRA Deduction Limits: how workplace plan coverage affects the deductibility of a traditional IRA contribution.
• IRS: Roth IRAs: the modified adjusted gross income thresholds and filing-status treatment for Roth contributions.
• IRS: Retirement Topics 403b Contribution Limits: the fifteen years of service rule, the qualified organizations it applies to, and the ordering when both catch-ups are available.
• IRS: Retirement Topics 457b Contribution Limits: the special three-year catch-up and its incompatibility with the age 50 catch-up.
• IRS: SIMPLE IRA Plan: employer eligibility and the salary reduction contribution rules.
• IRS: Simplified Employee Pension Plan (SEP): participation requirements and the employer contribution structure.
• IRS: Publication 560, Retirement Plans for Small Business: worked treatment of SEP, SIMPLE and qualified plan contribution limits for employers.
• IRS: Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs): the phase-out worksheets and the compensation definition used for IRA contributions.
• IRS: Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans: the monthly contribution rule, eligibility and the age 55 additional amount.
• Social Security Administration: Contribution and Benefit Base: the current taxable maximum and its link to the national average wage index.
• Social Security Administration: Contribution and Benefit Base Determination: the statutory formula, the two-year lag and the three-hundred-dollar rounding rule.
• Social Security Administration: Latest Cost-of-Living Adjustment: the third-quarter Consumer Price Index for Urban Wage Earners and Clerical Workers comparison used for benefit adjustments.
• Social Security Administration: National Average Wage Index: the wage series that drives the contribution and benefit base.
• Social Security Administration: Social Security Act Section 230: the statutory text governing the contribution and benefit base.

This content was reviewed by the Swoopr Editorial Team in August 2026 and reflects United States federal law and published guidance as of that date. It is general education about how limits are computed, not tax or investment advice, and it is not a substitute for reading the current-year figures on the agency pages linked above. Rules-based content on this site is re-verified quarterly.

Conclusion

The dollar figures attached to retirement accounts are the least durable thing about them. They change every autumn, they are published by three different bodies on three different schedules, and any page that restates them is wrong within months. What does not change is the structure underneath: a base amount in a named statute, an index named in the same statute, a base period, and a rounding step. Knowing that structure tells you which limits move together, why one can sit still for two years while another moves every year, and why an amount that looks like a single national limit is sometimes two independent ceilings. When you need this year's number, go to the agency page that computes it. When you need to understand why the number is what it is, the statute is the answer, and it has barely changed in twenty years.