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New IRA and Retirement Plan Contribution Limits for 2026 and What They Mean for You with Preferred Trust

By   ·  3 minute read

As you plan your retirement savings strategy for 2025 and beyond, it is important to understand how contribution limits are changing and how Preferred Trust Company helps you take full advantage of these increases.


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What Has Changed: Key Limits for 2026 and 2025

The IRS has announced cost-of-living adjustments for retirement plan and IRA contribution limits. Here are the most relevant updates based on the published IRS contribution chart.

  • The annual contribution limit for Traditional and Roth IRAs increases to $7,500 for 2026, up from $7,000 for 2025.
  • Individuals age fifty and older may contribute an additional $1,100 as a catch-up contribution for 2026.
  • The elective deferral limit for 401k, 403b, and most 457 plans rises to $24,500 in 2026.
  • The annual compensation limit for defined contribution plans increases to $360,000 in 2026.

These updates allow savers to place more money into tax-advantaged retirement accounts each year.

Contribution Limits 2025 - 11.24.25

Why the Limits Rise: Understanding the Adjustments

You may wonder: why do the contribution limits go up? Here’s the breakdown:

  1. Cost-of-Living / Inflation Adjustments
    The IRS indexes many retirement plan limits to measures of inflation or wage growth. These annual adjustments ensure that the value of retirement tax incentives does not erode over time. The increases you see for 2026 are consistent with historic practice.
  2. Legislative & Regulatory Changes
    Occasionally, Congress enacts laws (or regulatory guidance is issued) that affect retirement plan limits, catch-ups, eligibility rules, and Roth requirements. For example, catch-up provisions for certain age bands have been expanded in recent years.
  3. Encouraging Retirement Savings
    By raising contribution limits, the system gives savers a greater opportunity to shield more income for retirement with favorable tax treatment. From the perspective of Preferred Trust and our clients, these increases represent added flexibility and potential for growth.

What this Means for You as a Preferred Trust Accountholder

At Preferred Trust Company, we specialize in self-directed IRAs (SDIRAs), which allow you to invest beyond the typical stock-and-bond portfolio. Here’s how the new limits enhance your opportunity and how we help make the most of them:

  • Greater opportunity to contribute more: With the higher contribution thresholds, you can allocate more each year into your Traditional or Roth IRA, giving you more “tax-advantaged growth space.”
  • Flexibility to choose alternative assets: As you feed in more contributions, Preferred Trust empowers you to deploy those funds into a wide range of alternative investments like real estate, private placements, precious metals, private lending, and even digital assets.
  • Dedicated guidance & compliance oversight: We ensure you understand contribution rules, permissible assets, prohibited transaction risk, and the tax‐advantaged status of your account. Having higher limits makes this more meaningful, and the more you contribute, the more important the proper structure becomes.
  • Continued focus on control and diversification: The increases in contribution limits are a reminder that retirement savings are not “one size fits all.” With Preferred Trust’s self‐directed model, you maintain control over investment decisions, not just how much you save.

Action Steps: What You Should Do Now

To make the most of the higher limits and your IRA with Preferred Trust, consider these steps:

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Review your compensation and savings eligibility: Ensure you have sufficient earned income (or spousal compensation if applicable) to support max contributions.


Decision
Decide whether Traditional or Roth is best for you: With higher limits, the choice between tax-deductible (Traditional) vs. after-tax (Roth) contributions becomes even more strategic.


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Maximize contributions early in the year: Taking advantage of the full contribution limit sooner gives your money more time to grow.


Plan
Consider your investment plan: With higher contribution limits, plan how you’ll deploy the funds. Diversify your investment portfolio by considering alternative assets that align with your risk profile.

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Stay compliant with IRS rules: More savings means more importance on correct documentation, prohibited transaction avoidance, and timing. Preferred Trust is here to help you stay in compliance.

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Reassess annually: Because limits can change year-to-year (as they did for 2026), plan to revisit your contribution strategy each year.

 

Final Thoughts

The 2026 contribution limit increases create valuable opportunities for individuals who want more control over their retirement planning. For Preferred Trust account holders, these adjustments mean more funding capacity, more diversification, and more potential for long-term tax-advantaged growth.

Learn More About the New Retirement Account Limits

If you would like to review the full IRS contribution chart for 2026, including all plan types and compensation limits, you can find the complete publication here.

 


 

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