The Internal Revenue Service has announced that the annual 401(k) contribution limit will rise to £18,300 ($24,500) in 2026, up from £17,600 ($23,500) this year. While this increase, part of the IRS's annual cost-of-living adjustments, is welcome, experts warn it offers little relief for middle-class Americans struggling to save for retirement.
The increase, amounting to £750 ($1,000)—double the £375 ($500) rise seen in both 2024 and 2025—does little to address the broader savings crisis. Recent data shows most workers are unable to reach even the current limits, raising questions about whether higher caps benefit anyone beyond the wealthiest savers.
