What Are the Section 415 Limits for Retirement Plans?

The Section 415 limits are the Internal Revenue Code’s hard ceilings on what a tax-qualified retirement plan can put in or pay out each year. For 2026, total annual additions to a defined contribution plan such as a 401(k) cannot exceed $72,000, and the maximum annual benefit a defined benefit pension can pay is $290,000.¹ Both figures are adjusted for inflation each year, and both carry real teeth: an uncorrected breach can disqualify the plan and strip its tax advantages from the employer and every participant.

The Defined Contribution Cap

Section 415(c) governs 401(k), 403(b), and profit-sharing plans. It caps “annual additions” to any one participant’s account at the lesser of $72,000 or 100% of that participant’s compensation for the year.²

Annual additions include everything flowing into the account: employer contributions (matching, profit-sharing, and safe harbor), employee contributions (pre-tax deferrals, Roth contributions, and voluntary after-tax contributions), and forfeitures reallocated from other participants.

Compensation for this purpose means wages, salary, and other taxable pay, plus elective deferrals to a 401(k), a Section 125 cafeteria plan, or a Section 457 plan. The compensation a plan can actually use in its contribution formulas is itself capped at $360,000 for 2026 under Section 401(a)(17).³

The limitation year is usually the plan year, though a plan document can set a different 12-month window. Any additions above the applicable limit inside that window create a compliance failure.

Section 415 Versus the 402(g) Deferral Limit

The $72,000 annual additions cap is not the same thing as the 401(k) deferral cap most employees have in mind. Section 402(g) is what limits personal elective deferrals; for 2026, that cap is $24,500.⁴ Both limits apply at the same time but to different slices of the account.

Think of it this way. An employee earning $200,000 might defer $24,500 (stopping at the 402(g) ceiling), receive a $12,000 employer match, and get a $30,000 profit-sharing allocation. The combined $66,500 clears the Section 415 ceiling with room to spare. Add another $10,000 of profit sharing on top, though, and the total hits $76,500. That is a 415 violation even though no single contribution source broke its own limit.

One structural point worth knowing: governmental 457(b) plans sit outside Section 415 entirely. A participant with access to both a 403(b) and a governmental 457(b) through the same employer can fund each up to its own limit without the plans being aggregated under 415.⁵

Catch-Up Contributions Sit Outside the 415 Limit

Participants age 50 or older by year’s end can make catch-up contributions on top of the regular deferral limit. For 2026, the standard catch-up is $8,000 in a 401(k), 403(b), governmental 457, or Thrift Savings Plan.⁴ Catch-up contributions do not count as annual additions for Section 415 purposes, so older workers can save above the $72,000 ceiling without creating a plan failure.

The SECURE 2.0 Act added a higher tier for participants who turn 60, 61, 62, or 63 during the year. For 2026, that enhanced catch-up is $11,250.³ A participant who turns 64 during the year drops back to the $8,000 figure. For SIMPLE plans, the 2026 catch-up is $4,000, or $5,250 for the age-60-through-63 window.

The Defined Benefit Cap

Defined benefit pensions promise a fixed annual payment at retirement, so Section 415(b) caps the payout rather than any contribution. The maximum is expressed as a straight life annuity, meaning an annual payment for the participant’s lifetime with no survivor benefit.

The annual benefit cannot exceed the lesser of $290,000 for 2026 or 100% of the participant’s average compensation for the three highest consecutive years of plan participation.¹ The dollar figure adjusts in $5,000 increments. The compensation feeding the second prong is capped at $360,000 for 2026.

Short-Service Reductions

The $290,000 dollar limit is reduced proportionately for participants with fewer than 10 years of service with the employer. A participant with 7 years of service, for instance, sees the cap scaled to 70% of the full amount. The 100% compensation limit is similarly reduced for participants with fewer than 10 years of plan participation.¹

Early and Late Retirement Adjustments

If a participant begins collecting before reaching Social Security Retirement Age, the $290,000 figure is reduced to an actuarially equivalent amount reflecting the longer expected payout period. A benefit starting at 55 is worth significantly less annually than one starting at 67. A participant who delays past Social Security Retirement Age receives an upward actuarial adjustment.

Police officers, firefighters, emergency medical personnel, and members of the Armed Forces who participate in a state or local government defined benefit plan and have at least 15 years of qualifying service are exempt from the early-retirement reduction. They can receive the full dollar limit even when retiring well before Social Security Retirement Age.² The exemption does not extend to corrections officers, probation officers, or other public safety roles outside police, fire, and EMS.

Controlled Groups Are Aggregated

An employer cannot work around Section 415 by splitting a business into multiple entities and running a separate plan through each. Section 414 treats all employees of related employers as working for a single employer when testing the 415 ceilings.⁶

Three relationships trigger aggregation. A parent-subsidiary controlled group exists when one corporation owns at least 80% of another. A brother-sister group exists when the same small group of owners controls 80% or more of two or more corporations and has effective control of more than 50% of each. Affiliated service groups involve organizations that share ownership or management and perform services for one another.

For defined contribution plans, annual additions across every plan maintained by the controlled group are combined for each participant. If a person receives employer contributions from two related entities, the sum cannot exceed the single $72,000 limit. For defined benefit plans, the combined actuarially equivalent annual benefit across all plans in the group must stay within $290,000. The same principle applies when someone participates in both a 401(k) and a 403(b) maintained by employers under common control.⁷

Missing a controlled group relationship is one of the most common ways plans fail Section 415. The error typically surfaces during audits, after years of compounding, so owners of multiple businesses should map these relationships before running any contribution math.

What Happens If You Exceed the Limit

An uncorrected Section 415 violation can disqualify the plan. The consequences spread across everyone connected to it.

The plan’s trust loses its tax exemption, meaning it has to file an income tax return and pay tax on its investment earnings.⁸ That tax comes out of the pool meant to pay benefits to every participant, not just the one whose account was over the limit. The employer loses the deduction for contributions, which can only be deducted as amounts become includible in participants’ gross income; for a defined benefit plan without separate accounts, the deduction may be lost entirely. Contributions also become subject to Social Security, Medicare, and federal unemployment tax when they vest, with the employer on the hook for the employment-tax piece.

The IRS Employee Plans Compliance Resolution System (EPCRS) lets sponsors fix a 415 failure without losing qualified status.⁹ It has three tracks: Self-Correction for the sponsor to fix the error on its own, Voluntary Correction for a formal IRS submission that approves the method, and Audit Closing Agreement when the IRS catches the failure during an examination.

For a defined contribution excess, the plan removes annual additions in a prescribed order: unmatched voluntary after-tax contributions first (with earnings), then matched after-tax amounts with forfeiture of the match, then unmatched and matched elective deferrals in the same pattern, and employer contributions last. If the excess came from employer contributions, those amounts either get reallocated to other participants or sit in a suspense account to offset future employer contributions. A corrective distribution is reported on Form 1099-R, is taxable in the year received, is not subject to the 10% early-distribution penalty, and cannot be rolled over.¹⁰

A defined benefit overage is harder to unwind because there is no account to draw from. The primary fix is reducing the participant’s accrued benefit to the maximum permissible amount through a plan amendment or actuarial adjustment, after which the plan’s actuary recalculates funding.

2026 Numbers at a Glance

Annual additions limit (defined contribution plans): $72,000
Maximum annual benefit (defined benefit plans): $290,000
Elective deferral limit under Section 402(g): $24,500
Catch-up contribution, age 50 and older: $8,000
Enhanced catch-up, ages 60 through 63: $11,250
Annual compensation cap under Section 401(a)(17): $360,000³

1
Internal Revenue Service. COLA Increases for Dollar Limitations on Benefits and Contributions
2
Office of the Law Revision Counsel. 26 USC 415 – Limitations on Benefits and Contribution Under Qualified Plans
3
Internal Revenue Service. 2026 Amounts Relating to Retirement Plans and IRAs, as Adjusted for Changes in Cost-of-Living (Notice 2025-67)
4
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
5
Internal Revenue Service. Your 403(b) Plan Doesn’t Limit the Total Employer and Employee Contributions to Not Exceed the IRC Section 415(c) Limits
6
Office of the Law Revision Counsel. 26 USC 414 – Definitions and Special Rules
7
Office of the Law Revision Counsel. 26 U.S. Code 415 – Limitations on Benefits and Contribution Under Qualified Plans
8
Internal Revenue Service. Tax Consequences of Plan Disqualification
9
U.S. Department of Labor. Retirement Plan Correction Programs
10
Internal Revenue Service. Fixing Common Plan Mistakes – Failure to Limit Contributions for a Participant