What Is a 415? Defined Contribution and Benefit Limits

Section 415 of the Internal Revenue Code sets the ceilings on how much can go into your retirement plan account each year and how large a pension a qualified plan can pay you. For 2026, total annual contributions to a defined contribution plan such as a 401(k) cannot exceed $72,000, and the maximum yearly benefit from a defined benefit pension is $290,000.¹ These are hard limits: blow past them and the entire plan can lose its tax-qualified status.²

The Defined Contribution Limit

For a 401(k), 403(b), profit-sharing plan, or similar account, Section 415(c) caps what the IRS calls your “annual additions” for the year. That total includes everything that lands in your account from any source: your own salary deferrals, your employer’s match, any profit-sharing or nonelective employer contributions, and forfeitures reallocated from other participants’ accounts.²

For 2026, your annual additions cannot exceed the lesser of:

$72,000, or
100% of your compensation for the year

The dollar figure gets the attention, but the compensation rule bites for lower earners. If you make $50,000, your ceiling is $50,000, not $72,000. Compensation used in this test is itself capped: only the first $360,000 of pay counts for 2026.¹

How the Elective Deferral Limit Fits Underneath

The amount you personally choose to defer from your paycheck has its own, lower cap. For 2026 that elective deferral limit is $24,500.³ The 415 limit is the outer ceiling covering everyone’s contributions combined; the elective deferral limit governs only your slice. Employer money can keep filling the account up to $72,000 after you have hit $24,500.

Catch-Up Contributions Sit on Top

Catch-up contributions are excluded from the 415(c) calculation. The statute treats them separately, so they don’t count against the $72,000.⁴ For 2026, the standard catch-up for participants 50 and over is $8,000. A SECURE 2.0 provision creates a higher catch-up for participants who turn 60, 61, 62, or 63 during the year, set at $11,250 for 2026.³ A participant in that age band with enough compensation could see total additions of $83,250 for the year.

SECURE 2.0 also requires higher earners to make their catch-ups on a Roth basis. Workers who earned more than $150,000 in FICA wages the prior year will have to route catch-ups after-tax rather than pre-tax. The IRS has set this rule to take effect for taxable years beginning after December 31, 2026, so it doesn’t apply until 2027.⁵ The dollar amount doesn’t change, only whether the contribution is pre-tax or Roth.

The Defined Benefit Limit

For a pension plan, Section 415 restricts the benefit that comes out rather than the contributions that go in. For 2026, the maximum annual benefit is the lesser of:

$290,000, or
100% of your average compensation during your three highest-paid consecutive years

The $290,000 assumes a straight life annuity beginning at Social Security retirement age.¹ Start earlier and the dollar cap shrinks; delay past that age and it grows. The plan’s actuary handles the adjustment so that the benefit stays roughly equivalent regardless of when payments begin.² If the plan pays in another form, such as a lump sum, it must convert the payment to its actuarial equivalent using IRS-specified interest rates and mortality tables before comparing against the cap.

The 10-Year Phase-In

The dollar limit builds over your first 10 years of participation. If you have fewer, the cap is reduced by a fraction: your years of participation over 10. Six years of participation produces a limit of $174,000. The 100% of compensation limit uses the same fraction, but based on years of service rather than years of participation.² The fraction never falls below 1/10, so even a first-year participant gets at least $29,000.

The Small Benefit Exception

If your combined annual pension from all of the employer’s defined benefit plans is $10,000 or less, it’s automatically treated as within the 415 limit. This works only if you have never been in a defined contribution plan sponsored by the same employer.² It mainly protects small plans covering part-time or short-tenure workers whose compensation average might otherwise push the limit below $10,000.

Aggregation Across Related Employers

Section 415 applies per employer, but the definition of employer is broader than most people expect. Businesses under common ownership are treated as one, and their plans get combined for the 415 test.⁶ For 415 purposes, aggregation kicks in at more than 50% common ownership. That’s a lower threshold than the 80% used elsewhere in the tax code, so it catches more employer groups.² Controlled groups and affiliated service groups both fall inside.

All defined contribution plans across the related group share a single $72,000 test, and all defined benefit plans share a single $290,000 test. If an owner runs Company A with a 401(k) and Company B with a profit-sharing plan, and the two form a controlled group, the annual additions from both count against one ceiling. You cannot double the limit by splitting contributions across entities you control.

Truly unrelated employers are tested separately. A teacher contributing to a school district 403(b) who also runs a side business with a solo 401(k) generally gets a separate 415 limit for each, because no one entity controls both.

403(b) plans get special treatment. The IRS treats each participant as exclusively in control of their own 403(b) annuity contract, so a 403(b) is generally not aggregated with a 401(a) plan.⁷ The exception is when the same participant controls the employer sponsoring the 401(a) plan. A hospital physician with a 403(b) who also owns a private practice with its own 401(k), for instance, has to satisfy 415(c) both separately and on a combined basis.

The Limitation Year

The 415 test runs over a 12-month period called the limitation year. Most plans use the plan year, but the plan document can specify a different 12-month window.⁸ Changing the limitation year creates a short year, and the dollar limit is prorated. Contributions are tested only within this window, so timing matters: contributions credited just outside the window fall into a different test.

What Happens If You Go Over

Exceeding a 415 limit endangers the plan’s tax-qualified status. A disqualified plan loses its tax treatment; employer contributions become nondeductible and participants can face tax on their full account balances. The IRS provides a way out through the Employee Plans Compliance Resolution System, so most 415 failures get corrected rather than triggering disqualification.⁹

For a defined contribution plan, the fix is returning the excess. The plan distributes the excess annual additions plus the earnings on that amount. There’s a priority order: unmatched elective deferrals come out first; if excess remains, matched deferrals come out and the related employer match is forfeited.⁹ For a defined benefit plan, the correction reduces the participant’s accrued benefit to the maximum the 415 limit allows, and that reduction is permanent.

The full corrective distribution, earnings and all, is taxable income in the year you receive it. Two features soften the hit: the 10% early distribution penalty does not apply, and the amount cannot be rolled into another retirement account or IRA.⁹

Plans can self-correct significant 415 failures within three years under the Self-Correction Program with no IRS filing or fee. Failures that don’t qualify for self-correction go through the Voluntary Correction Program, which requires a formal application and IRS review.⁹ Either path costs far less than disqualification.

1
IRS.gov. 2026 Amounts Relating to Retirement Plans and IRAs, as Adjusted for Changes in Cost-of-Living
2
Office of the Law Revision Counsel. 26 USC 415 – Limitations on Benefits and Contribution Under Qualified Plans
3
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
4
Office of the Law Revision Counsel. 26 USC 414 – Definitions and Special Rules
5
Internal Revenue Service. Treasury, IRS Issue Final Regulations on New Roth Catch-Up Rule, Other SECURE 2.0 Act Provisions
6
Office of the Law Revision Counsel. 26 USC 414 – Definitions and Special Rules
7
Internal Revenue Service. 403(b) Plan – Application of IRC Section 415(c) When a 403(b) Plan Is Aggregated With a Section 401(a) Defined Contribution Plan
8
Internal Revenue Service. Treatment of 415(c) Dollar Limitations in a Short Limitation Year
9
Internal Revenue Service. Fixing Common Plan Mistakes – Failure to Limit Contributions for a Participant