Notice 2026-66, 2027 Amounts Relating to Retirement Plans and IRAs, as Adjusted for Changes in Cost-of-Living, 2026-48 I.R.B. (Nov. 12, 2026). Internal Revenue Service, News Release IR-2026-136, 401(k) limit increases to $25,500 for 2027, IRA limit remains $7,500 (Nov. 12, 2026)

The Internal Revenue Service released Notice 2026-66 alongside its companion news release, IR-2026-136, establishing the cost-of-living adjustments (COLAs) applicable to dollar limitations for qualified pension plans, individual retirement accounts (IRAs), and related deferred compensation arrangements for tax year 2027. For certified public accountants, enrolled agents, and tax practitioners advising plan sponsors, high-net-worth individuals, and business owners, these annual adjustments represent far more than routine indexation. They define the statutory boundaries for qualified plan design, nondiscrimination testing thresholds, participant deferral elections, executive compensation benchmarks, and year-round retirement tax planning.

Statutory Authority and Administrative Purpose

The primary statutory mandate compelling the issuance of Notice 2026-66 is codified in Section 415 of the Internal Revenue Code (Code). Section 415 prescribes comprehensive limitations on benefits and contributions under qualified retirement plans. To prevent the real economic value of these statutory limits from being eroded by monetary inflation, Section 415(d) mandates that “the Secretary of the Treasury annually adjust these limitations for cost-of-living increases.”

The administrative purpose of Notice 2026-66 is twofold: to fulfill this nondiscretionary statutory requirement and to deliver actionable, timely operational parameters to taxpayers, plan administrators, and software providers before the commencement of the prospective plan year. In News Release IR-2026-136, IRS Chief Executive Officer Frank J. Bisignano articulated this administrative objective, observing:

“Along with the Working Families Tax Cuts, this increase in the pension limitations will help American families keep more of their hard-earned income. With the new adjustment in place now, the IRS is giving taxpayers and employers the information needed to make retirement planning decisions for the year ahead.”

Without formal annual guidance issued prior to the close of the calendar year, plan sponsors would be unable to update payroll systems, administer elective deferral elections, or structure annual additions in compliance with the qualification criteria of Section 401(a).

Procedural Background and Factual Summary

Notice 2026-66 and News Release IR-2026-136 were issued by the IRS on November 12, 2026. The technical notice was drafted by the Office of Associate Chief Counsel (Employee Benefits, Exempt Organizations, and Employment Taxes), with participation from other IRS technical personnel.

Substantively, Notice 2026-66 incorporates statutory amendments enacted under the SECURE 2.0 Act of 2022 (Division T of the Consolidated Appropriations Act, 2023), reflecting several structural changes that became operational or require prospective indexation. Most notably, the guidance establishes:

An increase in the elective deferral limit under Section 402(g)(1) to $25,500 (up from $24,500 for 2026).
An increase in the general defined contribution annual additions ceiling under Section 415(c)(1)(A) to $75,000 (up from $72,000 for 2026).
An increase in the defined benefit annual benefit ceiling under Section 415(b)(1)(A) to $300,000 (up from $290,000 for 2026).
An unchanged traditional and Roth IRA contribution ceiling under Section 219(b)(5)(A) of $7,500, with an unchanged $1,100 catch-up limit under Section 219(b)(5)(B)(ii).
Upward adjustments across both traditional IRA active participant phase-out thresholds under Section 219(g) and Roth IRA contribution phase-out bands under Section 408A(c)(3).
Expanded catch-up contribution tiers under Section 414(v), including the enhanced limit for participants aged 60 through 63, and an adjusted prior-year wage threshold under Section 414(v)(7)(A) governing mandatory Roth catch-up contributions.

Statutory Mechanics and Dual Cost-of-Living Methodologies

A critical technical aspect of Notice 2026-66 that practitioners must understand is that the Internal Revenue Code does not utilize a single, uniform indexation formula across all employee benefit provisions. Instead, Notice 2026-66 applies two distinct statutory methodologies, each governed by different underlying consumer price indices, base evaluation periods, and rounding conventions.

The Section 415(d) and Social Security Act Framework

Under Section 415(d), adjustments to core qualified plan limits are explicitly tied to the adjustment procedures governing Social Security benefit increases:

“Under section 415(d), the adjustments are to be made under adjustment procedures similar to those used to adjust benefit amounts under section 215(i)(2)(A) of the Social Security Act. Other amounts applicable to deferred compensation plans are also adjusted for cost-of-living increases using a variation of the methodology used for the adjustments under section 415(d).”

Statutorily, Section 215(i)(2)(A) of the Social Security Act evaluates changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), comparing the average third-quarter CPI-W of the current calendar year to the third-quarter average of the base year. Under Section 415(d)(4), qualified plan limits are rounded according to specific statutory increments—typically down to the nearest multiple of $500, $1,000, or $5,000 depending on the provision. For example, elective deferrals under Section 402(g)(1) and governmental 457(b) deferrals under Section 457(e)(15) are indexed to the nearest $500 increment, while the annual compensation limit under Section 401(a)(17) rounds to the nearest $5,000.

The Section 1(f)(3) Chained CPI Framework

In contrast, several personal retirement provisions—including IRA contribution and phase-out thresholds, the qualified charitable distribution limit, and the Saver’s Credit—are governed by Section 1(f)(3) of the Code. As the IRS highlights in Notice 2026-66:

“The Code also provides that several retirement-related amounts are to be adjusted using a variation of the methodology used for the cost-of-living adjustments under section 1(f)(3). After taking the applicable rounding rules into account, the amounts for 2027 are as follows...”

Following amendments made by the Tax Cuts and Jobs Act of 2017, Section 1(f)(3) mandates the use of the Chained Consumer Price Index for All Urban Consumers (C-CPI-U) over a 12-month period ending August 31 of the preceding calendar year. Because C-CPI-U accounts for consumer substitution behavior, it tends to rise more slowly than the traditional CPI-W index. Furthermore, statutory rounding rules under Section 219(b)(5)(C) require adjustments to the IRA contribution limit to be rounded down to the nearest multiple of $500. For 2027, the cumulative inflation increment under the C-CPI-U formula did not cross the statutory $500 threshold, leaving the base IRA limitation under Section 219(b)(5)(A) unchanged at $7,500.

Application of Law to Qualified Defined Benefit and Contribution Plans

Applying the statutory indexation rules of Section 415 to macroeconomic price indices yields substantial increases in qualified plan caps effective January 1, 2027.

Defined Benefit Plan Limitations

For defined benefit plans, Section 415(b)(1)(A) imposes an absolute dollar cap on the annual benefit payable to a participant in the form of a straight life annuity. For 2027, Notice 2026-66 increases this limit from $290,000 to $300,000.

For participants who separated from service prior to January 1, 2027, Section 415(b)(1)(B) limits the annual benefit to 100 percent of the participant’s average compensation for their high three consecutive calendar years. Under Section 415(d)(1)(C), this compensation limitation is adjusted annually for cost-of-living increases. Notice 2026-66 applies the statutory formula to establish that:

“For a participant who separated from service before January 1, 2027, the participant’s limitation under a defined benefit plan under section 415(b)(1)(B) is computed by multiplying the participant’s compensation limitation, as adjusted through 2026, by 1.0350.”

This factor represents a 3.50 percent cost-of-living adjustment applicable to separated participants.

Defined Contribution Plan Annual Additions

For defined contribution plans (including profit-sharing, 401(k), and money purchase pension plans), Section 415(c)(1)(A) limits total “annual additions”—comprising employer contributions, employee elective deferrals, employee after-tax contributions, and forfeitures allocated to a participant’s account. Notice 2026-66 increases the Section 415(c)(1)(A) ceiling from $72,000 to $75,000.

When coupled with the age 50 catch-up contribution, a qualifying participant can see total additions across employer and employee sources reach $83,500 in 2027, or up to $86,750 for participants eligible for the enhanced age 60 through 63 catch-up.

Application of Law to Elective Deferrals and Catch-Up Provisions

The limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3)—which governs 401(k) plans, Section 403(b) tax-sheltered annuities, and the federal government’s Thrift Savings Plan—is increased from $24,500 to $25,500 for taxable years beginning in 2027. Pursuant to Section 457(e)(15), the deferral limit for eligible deferred compensation plans of state and local governments and tax-exempt entities under Section 457(b) is likewise increased from $24,500 to $25,500.

General Catch-Up Contributions

Under Section 414(v)(2)(B)(i), the additional elective deferral permitted for individuals who attain age 50 before the close of the plan year in an applicable employer plan (other than SIMPLE plans described in Section 401(k)(11) or Section 408(p)) is increased from $8,000 to $8,500. Consequently, as highlighted in IR-2026-136:

“Therefore, participants in most 401(k), 403(b), governmental 457 plans and the federal government’s Thrift Savings Plan who are 50 and older generally can contribute up to $34,000 each year, starting in 2027.”

SECURE 2.0 Enhanced Catch-Up Contributions for Ages 60 Through 63

Enacted under Section 109 of SECURE 2.0, Section 414(v)(2)(E)(i) establishes a higher alternative catch-up contribution ceiling for participants who attain age 60, 61, 62, or 63 during the taxable year. Statutorily, this enhanced limit is defined as the greater of $10,000 (indexed) or 150 percent of the standard age 50 catch-up limit in effect for 2024. In Notice 2026-66, the IRS calculates that this enhanced catch-up contribution limitation increases from $11,250 to $11,750 for 2027. Participants qualifying under this age bracket can therefore contribute a total elective deferral of $37,250 ($25,500 standard deferral plus $11,750 catch-up) into an applicable employer plan for 2027.

Mandatory Roth Catch-Up Wage Threshold

Section 603 of SECURE 2.0 amended Section 414(v)(7)(A) to mandate that in the case of an eligible participant whose wages (as defined in Section 3121(a)) from the employer sponsoring the plan exceeded an indexed dollar threshold in the preceding calendar year, all catch-up contributions must be designated as Roth elective contributions.

Notice 2026-66 announces that the FICA wage threshold evaluated from the 2026 calendar year—used to determine whether an employee’s catch-up contributions in 2027 must be designated as Roth contributions—is increased from $150,000 to $155,000. Plan administrators and payroll processors must evaluate 2026 Form W-2 Box 5 Medicare wages against this $155,000 threshold when configuring 2027 catch-up elections.

Application of Law to SIMPLE Plans and Starter 401(k) Arrangements

Notice 2026-66 details the bifurcated contribution structures governing Savings Incentive Match Plan for Employees (SIMPLE) retirement accounts under Section 408(p) and SIMPLE 401(k) plans under Section 401(k)(11), as modified by Section 117 of SECURE 2.0.

Under Section 408(p)(2)(E)(i)(III), the standard salary reduction contribution limit is increased from $17,000 to $17,500. However, for certain eligible employers—specifically employers with 25 or fewer employees, or employers with 26 to 100 employees that provide specified matching or nonelective contributions—Section 408(p)(2)(E)(i)(I) and (II) permit an elevated deferral ceiling equal to 110 percent of the standard limit. For 2027, Notice 2026-66 increases this higher elective deferral threshold from $18,100 to $19,100.

The catch-up contribution limitations for SIMPLE arrangements reflect a corresponding bifurcation:

The standard catch-up limit under Section 414(v)(2)(B)(ii) for individuals aged 50 or over remains $4,000.
For applicable employers utilizing the higher contribution framework, the age 50 catch-up limit under Section 414(v)(2)(B)(iii) remains $3,850.
Under Section 414(v)(2)(E)(ii), the enhanced catch-up limit for employees attaining age 60, 61, 62, or 63 in 2027 remains $5,250.
The limit under Section 408(p)(2)(A)(iv) for additional employer nonelective contributions increases from $5,300 to $5,400.

For starter 401(k) deferral-only arrangements under Section 401(k)(16)(B) and safe harbor deferral-only 403(b) plans under Section 403(b)(16)(B), the elective contribution limitation under Sections 401(k)(16)(D)(i)(II) and 403(b)(16)(D)(i)(II) increases from $6,000 to $6,500. For individuals attaining age 50 before the close of the taxable year, this limitation is increased by an additional catch-up amount of $1,100.

Compensation Caps, Coverage Testing, and Executive Thresholds

Key plan administration and nondiscrimination compliance limits were adjusted upward in Notice 2026-66:

Annual Compensation Limitation

Under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii), the maximum amount of annual compensation that may be taken into account for benefit calculations, allocation formulas, and employer deduction limits increases from $360,000 to $375,000. For eligible participants in certain governmental plans that allowed cost-of-living adjustments to be taken into account under the plan in effect on July 1, 1993, the Section 401(a)(17) limit increases from $535,000 to $555,000.

Highly Compensated Employee and Key Employee Definitions

The compensation threshold under Section 414(q)(1)(B) used to identify a “highly compensated employee” (HCE) increases from $160,000 to $170,000. Because HCE status is generally determined using the look-back year under Treas. Reg. § 1.414(q)-1T, an employee who earned more than $160,000 in 2026 will be classified as an HCE for plan years beginning in 2027, whereas the $170,000 threshold will govern look-back testing for 2028.

For top-heavy plan compliance under Section 416(i)(1)(A)(i), the compensation threshold required to classify an officer as a “key employee” increases from $235,000 to $245,000.

Fringe Benefit Valuation and Other Operational Caps

Fringe Benefit Valuation: Under Treasury Regulation § 1.61-21(f)(5)(i), the compensation threshold defining a “control employee” for employer-provided vehicle valuation increases from $145,000 to $150,000. Under Treas. Reg. § 1.61-21(f)(5)(iii), the threshold based on compensation equal to or exceeding the Section 415(b)(1)(A) limitation increases from $290,000 to $300,000.
Qualifying Longevity Annuity Contracts (QLACs): The maximum premium limitation under Treas. Reg. § 1.401(a)(9)-6(q)(2)(ii) increases from $210,000 to $220,000.
Employee Stock Ownership Plans (ESOPs): Under Section 409(o)(1)(C)(ii), the dollar threshold for determining the maximum account balance subject to a 5-year distribution period increases from $1,455,000 to $1,505,000, while the incremental amount required to lengthen the distribution period increases from $290,000 to $300,000. The qualified gratuitous transfer ceiling under Section 664(g)(7) remains $65,000.
Simplified Employee Pensions (SEPs): The minimum compensation threshold under Section 408(k)(2)(C) requiring plan participation remains unchanged at $800.
Pension-Linked Emergency Savings Accounts (PLESAs): The maximum account balance attributable to participant contributions under Section 402A(e)(3)(A)(i) increases from $2,600 to $2,700.
Volunteer Service Awards: The aggregate accrual limit under Section 457(e)(11)(B)(ii) for bona fide volunteers remains $8,000.
Systemically Important Multiemployer Plans: Under Section 432(e)(9)(H)(v)(III)(bb), the threshold used to determine whether a multiemployer plan is systemically important increases from $1,505,000,000 to $1,576,000,000.

Application of Law to IRAs, Deductions, and Income Phase-Outs

Notice 2026-66 and IR-2026-136 reaffirm that the statutory deduction limit under Section 219(b)(5)(A) for qualified retirement contributions to traditional IRAs remains $7,500 for taxable years beginning in 2027. Pursuant to Section 219(b)(5)(B)(ii), the catch-up contribution limit for individuals who attain age 50 before the close of the taxable year remains $1,100. While the headline contribution caps are unchanged, the adjusted gross income (AGI) phase-out ranges for both traditional and Roth IRAs expanded significantly.

Traditional IRA Deductibility Phase-Out Bands

Under Section 219(g), taxpayers who are active participants in an employer-sponsored retirement plan face statutory phase-outs of their traditional IRA deduction:

Single or Head of Household: For an active participant filing as single or head of household, Section 219(g)(3)(B)(ii) establishes an “applicable amount” of $83,000 (increased from $81,000). Under Section 219(g)(2)(A), the deduction phases out ratably over a $10,000 corridor, resulting in a phase-out range of $83,000 to $93,000 (up from $81,000 to $91,000 for 2026).
Married Filing Jointly (Active Participant Contributor): Under Section 219(g)(3)(B)(i), the applicable amount for an active participant filing jointly increases from $129,000 to $133,000. The deduction phases out over a $20,000 corridor, establishing a phase-out range of $133,000 to $153,000 (up from $129,000 to $149,000 for 2026).
Married Filing Jointly (Non-Active Participant Spouse): Under Section 219(g)(7)(A), where the contributing spouse is not an active participant but is married to an active participant, the applicable amount increases from $242,000 to $250,000. Phased out over a $10,000 corridor, the deduction is eliminated between $250,000 and $260,000 (up from $242,000 to $252,000 for 2026).
Married Filing Separately: Pursuant to Section 219(g)(3)(B)(iii), the applicable amount for a married individual filing separately who is an active participant is not subject to an annual cost-of-living adjustment and remains $0, creating a fixed phase-out range of $0 to $10,000.

Roth IRA Contribution Eligibility Phase-Out Bands

Section 408A(c)(3) imposes income limitations on the ability of individuals to contribute directly to a Roth IRA:

Married Filing Jointly or Qualifying Widow(er): Under Section 408A(c)(3)(B)(ii)(I), the applicable threshold increases from $242,000 to $250,000, creating an AGI phase-out range under Section 408A(c)(3)(A) of $250,000 to $260,000 (up from $242,000 to $252,000 for 2026).
Single or Head of Household: Under Section 408A(c)(3)(B)(ii)(II), the threshold increases from $153,000 to $158,000, establishing a phase-out range of $158,000 to $173,000 (up from $153,000 to $168,000 for 2026).
Married Filing Separately: Under Section 408A(c)(3)(B)(ii)(III), the applicable amount is not subject to an annual COLA and remains $0, preserving the $0 to $10,000 phase-out corridor.

Qualified Charitable Distributions and Specialized Distributions

Qualified Charitable Distributions (QCDs): SECURE 2.0 indexed the annual QCD exclusion limitation under Section 408(d)(8)(A), which increases from $111,000 to $114,000 for 2027. The one-time election to fund a split-interest entity (charitable remainder trust or charitable gift annuity) under Section 408(d)(8)(F)(i)(II) increases from $55,000 to $57,000.
Domestic Abuse Distributions: The early withdrawal penalty exception under Section 72(t)(2)(K)(ii)(I) for distributions to victims of domestic abuse increases from $10,500 to $10,900.
Qualified Long-Term Care Distributions: Under Section 401(a)(39)(B)(i)(III), distributions from a qualified defined contribution plan to pay certified long-term care insurance premiums increase from $2,600 to $2,700.

Administrative Interpretations, Legislative Glitches, and Credit Transitions

Notice 2026-66 contains critical administrative positions addressing technical drafting defects and statutory phase-outs enacted under recent legislation.

Administrative Correction of the Section 45E Startup Credit Base Year

Footnote 1 of Notice 2026-66 highlights an extraordinary administrative interpretation regarding the small employer pension plan startup cost credit under Section 45E. Under Section 45E(f)(2)(C), an employer’s credit for contributions made on behalf of an employee is phased out if the employee’s compensation exceeds a specified statutory threshold.

Section 45E(f)(2)(C)(iii) directs that for taxable years beginning after 2023, this $100,000 limitation is adjusted under Section 1(f)(3) by substituting “calendar year 2007” for “calendar year 2016.” Applying a 2007 base year to an adjustment that first became effective in 2024 represents an obvious legislative drafting error that would inappropriately hyper-inflate the base period calculation. In Footnote 1, the IRS explicitly exercises administrative forbearance:

“Because the specification of a 2007 base period to be used for computing an adjustment that is first made for 2024 appears to be an error that has been identified as the subject of future legislative correction, the IRS will calculate and apply the limitation in section 45E(f)(2)(C) by substituting ‘calendar year 2022’ for ‘calendar year 2007’ in section 45E(f)(2)(C)(iii).”

Under this administrative correction, the compensation limit for excluded employees under Section 45E(f)(2)(C) remains $110,000 for 2027.

Saver’s Credit Transition to Saver’s Match

Footnote 2 of Notice 2026-66 resolves potential confusion regarding the Saver’s Credit under Section 25B in light of SECURE 2.0. Effective for taxable years beginning after December 31, 2026, Section 6433 introduces a direct federal matching contribution (“Saver’s Match”) that replaces the nonrefundable Section 25B tax credit for elective contributions made to qualified retirement plans and IRAs.

However, as the IRS clarifies in Footnote 2 (citing Section IV.A, Q&A A-1 of Notice 2026-48, 2026-35 I.R.B. 185), the Section 25B credit remains fully operative after December 31, 2026, with respect to contributions made to Achieving a Better Life Experience (ABLE) accounts under Section 529A. The adjusted 2027 AGI limitations under Section 25B(b) are:

Married Filing Jointly: Maximum 50% credit threshold up to $50,000 (from $48,500); 20% credit up to $54,000 (from $52,500); complete phase-out at $83,000 (from $80,500).
Head of Household: 50% tier up to $37,500 (from $36,375); 20% tier up to $40,500 (from $39,375); phase-out at $62,250 (from $60,375).
All Other Taxpayers (Single and MFS): 50% tier up to $25,000 (from $24,250); 20% tier up to $27,000 (from $26,250); phase-out at $41,500 (from $40,250).

Summary of Statutory Limitations for 2027

To assist tax practitioners in evaluating qualified plan documents and advising clients, the following comparative schedule synthesizes the primary statutory retirement figures:

Statutory Provision and Code Section	2026 Limitation	2027 Limitation
Defined Benefit Plan Annual Benefit (§ 415(b)(1)(A))	$290,000	$300,000
Defined Contribution Plan Annual Additions (§ 415(c)(1)(A))	$72,000	$75,000
Elective Deferrals (401(k), 403(b), TSP) (§ 402(g)(1))	$24,500	$25,500
Eligible Deferred Compensation Plans (Govt/Tax-Exempt 457(b)) (§ 457(e)(15))	$24,500	$25,500
Standard Catch-Up Contribution (Age 50+) (§ 414(v)(2)(B)(i))	$8,000	$8,500
Enhanced Catch-Up Contribution (Ages 60–63) (§ 414(v)(2)(E)(i))	$11,250	$11,750
Mandatory Roth Catch-Up Wage Threshold (Prior Year) (§ 414(v)(7)(A))	$150,000	$155,000
Annual Compensation Limitation (§ 401(a)(17), § 404(l))	$360,000	$375,000
Grandfathered Governmental Plan Compensation (§ 401(a)(17))	$535,000	$555,000
Highly Compensated Employee Threshold (§ 414(q)(1)(B))	$160,000	$170,000
Top-Heavy Key Employee Officer Threshold (§ 416(i)(1)(A)(i))	$235,000	$245,000
Standard SIMPLE Salary Reduction Contribution (§ 408(p)(2)(E)(i)(III))	$17,000	$17,500
Alternative Eligible Employer SIMPLE Contribution (§ 408(p)(2)(E)(i)(I)/(II))	$18,100	$19,100
Standard SIMPLE Catch-Up (Age 50+) (§ 414(v)(2)(B)(ii))	$4,000	$4,000
Alternative Eligible Employer SIMPLE Catch-Up (§ 414(v)(2)(B)(iii))	$3,850	$3,850
Enhanced SIMPLE Catch-Up (Ages 60–63) (§ 414(v)(2)(E)(ii))	$5,250	$5,250
Starter 401(k) / Safe Harbor Deferral-Only 403(b) (§ 401(k)(16)(D)(i)(II))	$6,000	$6,500
Traditional & Roth IRA Contribution Limit (§ 219(b)(5)(A))	$7,500	$7,500
IRA Catch-Up Contribution (Age 50+) (§ 219(b)(5)(B)(ii))	$1,100	$1,100
Traditional IRA Phase-Out: Single Active Participant (§ 219(g)(3)(B)(ii))	$81,000–$91,000	$83,000–$93,000
Traditional IRA Phase-Out: MFJ Active Participant (§ 219(g)(3)(B)(i))	$129,000–$149,000	$133,000–$153,000
Traditional IRA Phase-Out: MFJ Non-Active Participant Spouse (§ 219(g)(7)(A))	$242,000–$252,000	$250,000–$260,000
Roth IRA Contribution Phase-Out: Single / Head of Household (§ 408A(c)(3)(B)(ii)(II))	$153,000–$168,000	$158,000–$173,000
Roth IRA Contribution Phase-Out: MFJ (§ 408A(c)(3)(B)(ii)(I))	$242,000–$252,000	$250,000–$260,000
Qualified Charitable Distribution (QCD) Maximum (§ 408(d)(8)(A))	$111,000	$114,000
Split-Interest Entity QCD Maximum (§ 408(d)(8)(F)(i)(II))	$55,000	$57,000
Qualifying Longevity Annuity Contract (QLAC) Premium (Treas. Reg. § 1.401(a)(9)-6)	$210,000	$220,000
SEP Minimum Compensation Threshold (§ 408(k)(2)(C))	$800	$800
Pension-Linked Emergency Savings Account (PLESA) (§ 402A(e)(3)(A)(i))	$2,600	$2,700
ESOP Maximum Account Balance (5-Year Distribution) (§ 409(o)(1)(C)(ii))	$1,455,000	$1,505,000
Small Employer Startup Credit Excluded Wage Cap (§ 45E(f)(2)(C))	$110,000	$110,000

Strategic Tax Planning Takeaways for Practitioners

The adjustments promulgated under Notice 2026-66 present several actionable planning opportunities and compliance mandates:

First, practitioners should review clients’ retirement contribution schedules prior to January 1, 2027. Maximizing salary deferrals will allow employees to shelter $25,500, with an additional $8,500 available for individuals 50 and older (totaling $34,000). For business owners and executives participating in combined defined contribution and profit-sharing plans, the $3,000 increase in the Section 415(c) ceiling to $75,000 provides significant additional sheltering capacity.

Second, the enhanced catch-up rule for participants aged 60 through 63 ($11,750) provides a substantial window for late-career accumulation. Tax advisers must coordinate with payroll providers to ensure that plan recordkeepers can track birthdates precisely and apply the $11,750 ceiling only during the four calendar years in which participants reach ages 60, 61, 62, and 63.

Third, plan sponsors must prepare for the mandatory Roth catch-up rule under Section 414(v)(7)(A). Employers must examine employee Medicare wages from the 2026 tax year. Any participant whose 2026 FICA wages exceeded $155,000 must make their 2027 catch-up contributions as designated Roth contributions. Sponsoring employers that fail to provide a Roth feature in their plan document could inadvertently disqualify affected employees from making catch-up contributions altogether.

Finally, while the base IRA contribution limit remains static at $7,500, the upward shifts in phase-out thresholds create planning opportunities for middle- and upper-middle-income taxpayers. Couples with adjusted gross income between $242,000 and $250,000 who were previously phased out of deductible spousal IRA or direct Roth IRA contributions in 2026 will enjoy full eligibility in 2027.

Prepared with assistance from Gemini Notebook.