Updated October 29, 2026. Quick answer: The section 401(a)(17) compensation limit for 2026 is $360,000, up from $350,000 in 2025, per IRS Notice 2025-67. It is the most pay a qualified plan can count for each employee, so pay above it is ignored when a plan figures contributions, a match or benefits. The 2027 version of this limit has its own page, the 401(a)(17) pay limit for 2027.
More on the 2026 tax figures: the defined benefit plan limit for 2026.
The 2026 limit
The IRS Notice states it this way: “The annual compensation limitation under sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $350,000 to $360,000.”
| Year | Section 401(a)(17) limit | Change from prior year | Source |
|---|---|---|---|
| 2025 | $350,000 | Prior-year figure in IRS Notice 2025-67 | |
| 2026 | $360,000 | +$10,000 (computed) | IRS Notice 2025-67 |
The same Notice sets a higher limit for some governmental plans: “The annual compensation limitation under section 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost-of-living adjustments to the compensation limitation under the plan under section 401(a)(17) to be taken into account, is increased from $520,000 to $535,000.” That is the limit for participants in certain grandfathered governmental plans, not the general limit.
What the statute says
Section 401(a)(17)(A) says a plan qualifies only if “the annual compensation of each employee taken into account under the plan for any year does not exceed $200,000.” The $200,000 is the statute’s base amount and is indexed. Subparagraph (B) sets the rule: “for increases in the cost-of-living at the same time and in the same manner as adjustments under section 415(d); except that the base period shall be the calendar quarter beginning July 1, 2001, and any increase which is not a multiple of $5,000 shall be rounded to the next lowest multiple of $5,000.”
Check of the 2026 figure, using public inflation data: the BLS CPI-W averaged 174.133 for July to September 2001 and 317.265 for July to September 2025, a ratio of 1.82197. $200,000 times 1.82197 is $364,394 (computed), which rounds down to a multiple of $5,000, or $360,000. That matches the Notice. This is our arithmetic on public data, shown to explain the 2026 figure.
What it changes in practice
The limit caps the pay a plan counts, so it caps pay-based contributions. Take a plan that matches 4 percent of pay (an invented rate for the computation) and an employee paid $500,000 (invented, for the computation) in 2026. The plan counts only $360,000 of that pay, so the match is 4 percent of $360,000, or $14,400 (computed). The same limit is the compensation cap behind the 25 percent test on the SEP IRA contribution limit for 2026, and it is separate from the dollar cap on the total 401(k) limit for 2026.
Common mistakes
- Confusing this with the highly compensated employee threshold. That is a different test, and the Notice says “The threshold used in the definition of “highly compensated employee” under section 414(q)(1)(B) remains $160,000.”
- Using last year’s $350,000 for 2026 plan years. The Notice raised the limit to $360,000.
- Treating the limit as a cap on what you may earn. It caps the pay a plan counts, not the pay you can receive.
Related: the SEP IRA contribution limit for 2026, the total 401(k) limit for 2026, the highly compensated employee limit for 2026, and the 401(a)(17) pay limit for 2027.
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Answer againSources
- Internal Revenue Service, Notice 2025-67, 2026 Amounts Relating to Retirement Plans and IRAs, as Adjusted for Changes in Cost-of-Living: www.irs.gov
- 26 U.S.C. 401, Qualified pension, profit-sharing, and stock bonus plans (U.S. Code, 2024 edition, U.S. Government Publishing Office): www.govinfo.gov
- Bureau of Labor Statistics, CPI for Urban Wage Earners and Clerical Workers (CPI-W), U.S. city average, all items, series CWUR0000SA0 (public data API): api.bls.gov
Read from the primary documents linked above on October 29, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer or the IRS itself is the right place to confirm anything consequential.