IRS Announces Retirement Contribution Increases for 2026 — What It Means for Business Owners, Creators, and High-Income Professionals

On November 13, 2025, the IRS issued IR-2025-111 announcing major increases to retirement contribution limits beginning January 1, 2026. These changes affect nearly every taxpayer — W-2 earners, freelancers, small business owners, independent contractors, and high-income professionals.

For many Velin & Associates clients — including YouTubers, Shopify Store Owners, Amazon Sellers, Doctors, Dentists, Filmmakers, TikTok Creators, and High-Net-Worth Individuals — these new limits present an opportunity to significantly reduce taxes and accelerate retirement savings.

This article breaks down the updated 2026 limits, why the IRS is raising them, tax strategies to use before the year ends, and examples from real client situations we handle at our firm.

Why Are Retirement Contribution Limits Increasing?

Every fall, the IRS adjusts contribution limits to match increases in inflation. Because inflation has been elevated in recent years, the IRS has continued to raise limits to help Americans keep pace.

Higher limits allow taxpayers to:
⠀
✓ Deduct more
✓ Lower taxable income
✓ Save more for retirement
✓ Take advantage of compounding growth
✓ Create stronger long-term wealth

For business owners and self-employed individuals, these increases can translate into tens of thousands of dollars in tax savings per year when structured properly.

Updated 2026 IRS Retirement Contribution Limits (Detailed Breakdown)

Below is an expanded, easy-to-understand summary of the new limits.

401(k), 403(b), 457, and TSP Plans (Most Common Employer Plans)

2026 Elective Deferral Limit: $25,500 (up from $23,500 in 2025)

Age 50+ Catch-Up: $7,500

Total Potential Employee Contribution: $33,000

These increases benefit millions of W-2 employees, including:
⠀
• Doctors and dentists employed by medical groups
• Engineers and tech professionals
• Film production employees
• Executives and highly compensated workers

IRA and Roth IRA Limits

2026 IRA Contribution Limit: $7,500 (up from $7,000)

Age 50+ Catch-up: $1,000

Roth IRA income phaseouts for 2026 will also increase, letting more clients access Roth accounts directly.

SIMPLE IRA (Available to Small Businesses)

2026 SIMPLE IRA Contribution Limit: $17,500

Age 50+ Catch-Up: $3,500

Great for:
⠀
• Small dental practices
• Small medical practices
• Content creators with part-time employees
• Film production companies
• Boutique eCommerce brands
• Family-owned businesses

SEP IRA (Popular Among Self-Employed Clients)

2026 SEP Contribution Limit:

Up to $72,000, depending on net business income.

Ideal for:

• YouTubers and TikTok creators with large profits
• High-profit Shopify stores
• Amazon FBA businesses
• Consultants, freelancers, and sole proprietors
• High-net-worth individuals seeking large deductions

Defined-Benefit / Cash Balance Pension Plans

For high-income earners — especially Doctors, Dentists, and High-Net-Worth Individuals — contribution limits can exceed $150,000 to $300,000+ per year depending on actuarial calculations and company structure.

These plans allow clients to dramatically reduce taxable income while building large retirement nest eggs.

Expanded Examples

Below are longer, fully developed examples illustrating how the new IRS limits apply in real planning situations.

Example 1: YouTuber & TikTok Creator — Solo 401(k)

A client earning $420,000/year from YouTube, sponsorships, TikTok partnerships, and online courses sets up a Solo 401(k).

In 2026:

• Employee deferral: $25,500
• Employer contribution (20% of net earnings): $44,000+
• Total potential contribution: $70,000+

This reduces their tax liability by over $25,000 while building a large retirement balance — especially powerful for younger creators whose income fluctuates.

This is a common structure we create for:

⭐ CPA for YouTubers
⭐ CPA for TikTokers
⭐ CPA for Creators
⭐ CPA for Filmmakers

Example 2: Shopify Store Owner — SEP IRA

A Shopify entrepreneur nets $320,000 in profits.

With the higher 2026 limits, they can contribute up to $72,000 into a SEP IRA — a massive deduction that cuts their taxable income dramatically.

This strategy is ideal for:
🛒 CPA for Shopify Store
🛒 Online Commerce CPA
🛒 CPA for Amazon Business

Example 3: Dental Practice — 401(k) + Cash Balance Plan

A dentist earning $500,000 wants to lower taxes and accelerate long-term savings.

We can set up:

• A group 401(k) with profit sharing
• A cash balance pension plan

Total 2026 contributions:
Over $230,000 tax-deductible

This structure is common for:
🦷 Dentist CPA
🦷 CPA for Dental Practice
🏥 CPA for Medical Practice

Example 4: High-Net-Worth Couple — Mega Strategy

A married couple earning $1M+ from real estate, investments, and consulting uses a combination of:

• 401(k) max contributions
• Backdoor Roth IRAs
• Mega Backdoor Roth (through employer plan)
• A cash balance plan
• Roth conversions during low-income years
• Gifting through family limited partnerships

In 2026 alone, they shelter hundreds of thousands in pre-tax savings while building tax-free Roth wealth for long-term estate planning.

This is typical for:
💼 CPA for High Net Worth Individuals

Planning Strategies for 2026 — What You Should Do Now

The new limits provide opportunities, but only if clients plan early.
Some of the strategies Velin & Associates commonly recommends:

✔ Increase monthly contributions now
Many W-2 employees fall short because contributions start too late.

✔ Set up a Solo 401(k) or SEP early
Don’t wait until year-end — especially if income is rising.

✔ Plan Roth IRA eligibility
Higher income phaseouts may open Roth options for more households.

✔ Explore Cash Balance Plans
Perfect for clients ages 45+ with income over $300,000.

✔ Shift S-Corp salary vs. distribution planning
This maximizes 401(k) contributions while optimizing tax outcomes.

✔ Plan for multi-entity structures
Creators, doctors, dentists, and eCommerce owners often benefit from:
⠀
• Parent companies
• Management companies
• Support LLCs
• Income stacking
• Retirement layering

Why This Matters: Tax Savings Add Up Quickly

A family earning a combined $500,000 could save:

• $20,000–$60,000+ using 401(k) and IRA limits
• Another $100,000–$200,000 with a cash balance plan
• More with Roth planning and entity structuring

Creators and online business owners often save even more due to flexible entity planning.

For more information about our tax planning services, contact us today: visit our website.

Velin & Associates, Inc

8159 Santa Monica Blvd STE 198/200 West Hollywood, CA 90046
323-902-1000
dmitriy@losangelescpa.org

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