Defined Benefit Plan Limit 2026
Current year
For 2026, the Defined Benefit Plan Limit is $290,000 (Annual benefit under a defined benefit plan) and $72,000 (Defined contribution plan limit).
Effective 2026-01-01Source: Notice 2025-67 (IRS)Verified 2026-09-01
Compared with 2025
| Item | 2025 | 2026 | Change |
|---|---|---|---|
| Annual benefit under a defined benefit plan | $280,000 | $290,000 | +$10,000 (+3.6%) |
| Defined contribution plan limit | $70,000 | $72,000 | +$2,000 (+2.9%) |
Who it applies to
Sponsors and participants of qualified defined benefit and defined contribution retirement plans under Internal Revenue Code Section 415.
What changed this year, and why
For 2026, the IRS increased the annual benefit limit under a defined benefit plan to $290,000 and the defined contribution plan limit to $72,000.
Common questions
- What is the maximum annual benefit a defined benefit plan can pay in 2026?
- Effective January 1, 2026, the limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) is $290,000.
- What is the defined contribution plan limit for 2026?
- The limitation on contributions under a defined contribution plan under Section 415(c)(1)(A) is $72,000 for 2026.
Every amount on this page is a published figure rather than yours. The Plan limit headroom takes the number you enter and works it out against them, showing which published figure it used.
The benefit limit is the lesser of a dollar cap and your average pay
The IRS limits the annual retirement benefit a participant can receive under a defined benefit plan to the lesser of two amounts: 100% of the participant's average compensation for their highest 3 consecutive calendar years, or a specified dollar cap. For 2026, that dollar cap is $290,000. Because the limit is the lesser of the two figures, a participant whose average pay over their best three-year stretch falls below $290,000 will have their benefit limited to 100% of that lower average instead. The compensation figure is based on the three consecutive calendar years in which the participant earned the most, not necessarily the years immediately before retirement. The limit applies to the benefit payable under the plan's normal benefit formula and is enforced so that tax-qualified defined benefit plans in the United States do not provide disproportionately large retirement benefits to highly compensated participants.
participant under a defined benefit plan can't exceed the lesser of the following amounts. 1. 100% of the participant's average compensation for their highest 3 consecutive calendar years.
Publication 560 (2025), Retirement Plans for Small Business (IRS)
What makes a plan a defined benefit plan
A defined benefit plan is defined as any plan that is not a defined contribution plan. Instead of specifying a fixed annual contribution amount, a defined benefit plan promises participants a specific benefit when they retire. The employer's annual contribution is calculated based on what is needed to fund those promised benefits. Because this calculation requires actuarial assumptions and computations - projecting future obligations and determining present values - ongoing professional assistance is generally required. For 2026, the annual benefit that can be paid to any participant under a defined benefit plan cannot exceed $290,000.
A defined benefit plan is any plan that isn't a defined con- tribution plan. Contributions to a defined benefit plan are based on what is needed to provide definitely determina- ble benefits to plan participants.
Publication 560 (2025), Retirement Plans for Small Business (IRS)
The compensation an employer may take into account
When calculating contributions and deductions for retirement plans, employers cannot use an employee's total pay without restriction. The law caps the amount of compensation that may be considered for each participant. For 2026, the maximum compensation that can be taken into account is $360,000 per employee. If an employee earns more than this amount, only $360,000 of their pay is used in plan calculations such as determining contribution limits or benefit accruals. This cap is adjusted periodically for inflation. The limitation applies across all qualified retirement plans, whether defined benefit or defined contribution, ensuring that highly compensated employees do not receive disproportionately large tax-advantaged retirement benefits based on income above this threshold.
The maximum compensation that can be taken into account for each employee in 2025 is $350,000 ($360,000 in 2026).
Publication 560 (2025), Retirement Plans for Small Business (IRS)
The separate limit on a defined contribution plan
The IRS places a separate ceiling on defined contribution plans. For 2026, the annual contributions and other additions (excluding earnings) allocated to a participant's account cannot exceed the lesser of 100% of the participant's compensation or $72,000. This limit applies to the total of employer contributions, employee contributions, and forfeitures allocated to the account for the year. Because earnings are excluded from the calculation, investment growth inside the account does not count against the cap. The defined contribution limit operates independently from the defined benefit limit, so each type of plan has its own ceiling. Catch-up contributions made by participants age 50 or older are not subject to this limit and may be added on top of the regular amount.
a defined contri- bution plan's annual contributions and other additions (ex- cluding earnings) to the account of a participant can't ex- ceed the lesser of the following amounts. 1. 100% of the participant's compensation.
Publication 560 (2025), Retirement Plans for Small Business (IRS)
Why the deduction has to be figured by an actuary
Unlike defined contribution plans where the contribution amount is straightforward, defined benefit plans require complex calculations to determine how much the employer must contribute each year. These calculations involve actuarial assumptions about factors such as employee mortality, retirement ages, salary projections, and investment returns. The deduction for contributions to a defined benefit plan is based on actuarial assumptions and computations. Consequently, an actuary must figure your deduction limit. The IRS requires this professional analysis because the contribution amount depends on projecting future benefit obligations and determining the present value of those obligations. Attempting to calculate this deduction without actuarial expertise could result in incorrect figures that do not comply with tax law requirements.
The deduction for contributions to a defined benefit plan is based on actuarial assump- tions and computations. Consequently, an actuary must figure your deduction limit.
Publication 560 (2025), Retirement Plans for Small Business (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Notice 2025-67 (IRS)
- Annual benefit under a defined benefit plan
Effective January 1, 2026, the limitation on the annual benefit under a defined benefit plan under section 415(b)(1)(A) of the Code is increased from $280,000 to $290,000.
- Defined contribution plan limit
The limitation for defined contribution plans under section 415(c)(1)(A) is increased in 2026 from $70,000 to $72,000.
By year
Every published year
11 years on record, 2026 back to 2016. Each year links to its own page, its own document and its own verification date.