What Is the 415(c) Limit for Defined Contribution Plans?

For 2026, the 415(c) limit for defined contribution plans caps a participant’s total annual additions at the lesser of $72,000 or 100% of compensation for the limitation year.¹ Everything flowing into the account counts against that ceiling: employer contributions, employee deferrals, forfeitures, and voluntary after-tax contributions combined. Breach it, and the plan’s tax-qualified status is at risk, which is why administrators watch this number closely all year.

What Counts Toward the Limit

Section 415(c) applies to a participant’s “annual additions” for the limitation year, usually the plan year. Annual additions include employer contributions (matching and profit-sharing), employee elective deferrals both pre-tax and Roth, forfeitures reallocated from former participants’ accounts, and voluntary after-tax employee contributions.²

Several categories of money moving into the account are left out of the calculation. Rollovers from another qualified plan or IRA are excluded by statute.³ Loan repayments and investment earnings are also disregarded. Catch-up contributions for participants aged 50 or older sit outside 415(c) entirely, which is why an eligible participant can put the full catch-up on top of the $72,000 ceiling.²

Restorative payments are another exclusion. When an employer or fiduciary deposits money to make up for a fiduciary breach or administrative error, that deposit is not treated as a contribution so long as it restores the plan to the position it would have been in absent the mistake. A restorative payment cannot substitute for contributions the employer already owed.

The Compensation Prong

Every participant’s 415(c) ceiling is the smaller of $72,000 or 100% of compensation.⁴ The dollar figure adjusts annually for inflation; it rose from $70,000 in 2025.¹

The 100% test is what constrains lower-paid participants. A worker earning $55,000 has a 415(c) limit of $55,000, because compensation is the binding number. Someone earning $80,000 hits the $72,000 dollar cap first.

Compensation for this purpose is broad. It includes wages, salary, bonuses, commissions, and similar pay for services, and it also includes elective deferrals and other pre-tax salary-reduction amounts. In other words, 415(c) compensation is measured before the participant’s own deferrals are taken out.

One point catches plan administrators off guard: the 415(c) compensation test is not capped by the separate 401(a)(17) annual compensation limit ($360,000 for 2026).¹ The 401(a)(17) limit controls nondiscrimination testing and contribution formulas, but the 415(c) test uses the participant’s full actual compensation. This matters only for high earners over the $360,000 threshold.

Post-severance pay can still count. Treasury regulations allow payments made by the later of 2½ months after the employee’s severance date or the end of the limitation year that includes the severance, as long as the amounts would have been compensation if paid while the person was still employed.⁵ Final paychecks, accrued vacation payouts, and bonuses earned before departure typically fall in this window.

How Catch-Ups Sit on Top of the Ceiling

Because catch-up contributions are excluded from annual additions, they effectively raise a participant’s ceiling. For 2026, the standard catch-up for participants aged 50 and over is $8,000, up from $7,500 in 2025.⁶ A participant 50 or older can therefore see up to $80,000 in total contributions: $72,000 in annual additions plus $8,000 in catch-up.

SECURE 2.0 added an enhanced catch-up for participants who turn 60, 61, 62, or 63 during the year. For 2026, that enhanced amount is $11,250.¹ A 61-year-old could receive up to $83,250 total ($72,000 plus $11,250). Participants aged 64 and above go back to the standard $8,000.

415(c) Versus the 402(g) Deferral Limit

The 402(g) limit and the 415(c) limit do different jobs, and mixing them up is one of the most common compliance errors in plan administration. Section 402(g) restricts only the employee’s elective deferrals (pre-tax and Roth combined) to $24,500 for 2026.⁶ Section 415(c) caps total annual additions from all sources at $72,000. The 402(g) limit is one slice inside the larger 415(c) pie.

An example: an employee defers $24,500 and the employer contributes $47,500 in matching and profit-sharing, totaling exactly $72,000. Both limits are satisfied. If the same employee deferred $25,000, 402(g) would be breached even though the $72,000 total stayed intact.

The two limits also work on different scales. The 402(g) limit applies per individual across every plan they participate in during a calendar year, no matter how many employers are involved.⁷ Someone working two unrelated jobs who defers $15,000 into each employer’s 401(k) has exceeded $24,500. The 415(c) limit applies per employer (including controlled groups), so that same person gets a separate $72,000 ceiling at each unrelated employer.

After-Tax Contributions and the Mega Backdoor Roth

Some plans allow voluntary after-tax contributions beyond the $24,500 elective deferral limit. Those after-tax dollars count toward 415(c).⁸ The room available for them is whatever remains after elective deferrals and employer contributions are subtracted from $72,000.

Take a participant who defers $24,500 and receives $10,000 in employer match. That leaves $37,500 of room under the ceiling. If the plan permits, the participant can fill that gap with after-tax contributions and then convert them to a Roth IRA or Roth 401(k) account, the strategy commonly called the mega backdoor Roth. Not every plan offers the feature, and attempting it without confirming plan provisions risks blowing through 415(c).

Self-Employed Participants

Self-employed people with solo 401(k) or profit-sharing plans face a twist: “compensation” means earned income rather than a W-2 salary. Earned income here starts with net earnings from self-employment and subtracts two amounts: the deductible half of self-employment tax and the plan contribution itself.⁹

The second deduction makes the math circular, because the contribution depends on earned income and earned income depends on the contribution. The IRS resolves this with worksheets and a reduced contribution rate. In rough terms, a self-employed person aiming to contribute 25% of compensation actually contributes 20% of net self-employment income after the SE tax adjustment, arriving at the same result. Skipping this step is one of the fastest ways for solo plan participants to overshoot 415(c) in a high-income year.

When Plans Get Combined

If a single employer sponsors more than one defined contribution plan, all of the plans are treated as one for 415(c) purposes.³ Setting up a second plan doesn’t give the same participant another $72,000. Combined annual additions across every plan from that employer must stay under a single ceiling.

Aggregation reaches further than one company. Businesses sharing common ownership are often treated as a single employer under IRC Section 414.¹⁰ That covers:

Controlled groups, meaning corporations connected through 80% or greater ownership chains.
Commonly controlled trades or businesses, using principles similar to the corporate rules for partnerships, sole proprietorships, and other unincorporated businesses.
Affiliated service groups, meaning service organizations that regularly perform work for each other or share significant ownership by highly compensated employees.

All of these require aggregation across every entity in the group. A physician who owns both a medical practice and a consulting LLC cannot treat them as separate employers for 415(c) if the common control thresholds are met.

Plans at truly unrelated employers, with no shared ownership and no affiliated service group relationship, are not aggregated. A person working two jobs at unrelated companies gets a separate 415(c) limit at each. Where people run into trouble is assuming a side business is unrelated when common ownership rules say otherwise.

403(b) and 401(a) Coordination

Contributions to a 403(b) annuity contract are generally not aggregated with a separate 401(a) defined contribution plan, because the participant is treated as maintaining the 403(b) independently.¹¹ An exception forces aggregation when the participant controls the employer sponsoring the 401(a) plan. In that scenario, both plans must satisfy 415(c) individually and on a combined basis.

No Combined Limit for DB and DC Plans

Section 415(e) once imposed a combined ceiling when the same participant was in both a defined benefit and a defined contribution plan. Congress repealed it in 1996.⁴ Each plan type now applies its own limit separately. A participant can receive the full defined contribution annual addition and a full defined benefit accrual in the same year.

Correcting an Excess

When annual additions exceed the 415(c) limit, the plan has a qualification defect and needs correction. The IRS provides that path through the Employee Plans Compliance Resolution System (EPCRS), which lets sponsors fix the failure without losing tax-qualified status.¹²

If the excess traces to employer contributions, the standard fix is to forfeit the excess into an unallocated suspense account. The money stays in the plan and reduces the employer’s required contributions in future years rather than sitting in any participant’s account.⁸ If the excess came from employee elective deferrals, the plan distributes it (plus attributable earnings) back to the participant, reported on Form 1099-R and generally taxable in the year of distribution.¹³

EPCRS has three tracks: the Self-Correction Program (SCP), the Voluntary Correction Program (VCP), and the Audit Closing Agreement Program. The Self-Correction Program lets sponsors fix operational failures without filing anything with the IRS, provided the plan had favorable determination letter procedures in place and the correction happens within a reasonable time.¹⁴

Under prior rules, self-correction of significant failures had to be substantially completed by the end of the third plan year after the year of the failure. SECURE 2.0 Section 305 removed that deadline for “eligible inadvertent failures,” making the self-correction period effectively indefinite, though the IRS can cut it short if it spots the failure before the sponsor has taken concrete steps to fix it.¹⁵ Failures outside that category, or situations where the sponsor wants a formal IRS sign-off, go through the Voluntary Correction Program, which requires a written submission and a compliance fee. Catching an excess early and using EPCRS is almost always cheaper than letting a qualification defect sit.

1
IRS. 2026 Amounts Relating to Retirement Plans and IRAs, as Adjusted for Changes in Cost-of-Living
2
Internal Revenue Service. Retirement Topics – 401(k) and Profit-Sharing Plan Contribution Limits
3
Office of the Law Revision Counsel. 26 U.S. Code 415 – Limitations on Benefits and Contribution Under Qualified Plans
4
Office of the Law Revision Counsel. 26 USC 415 – Limitations on Benefits and Contribution Under Qualified Plans
5
eCFR. 26 CFR 1.415(c)-2 – Compensation
6
IRS. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
7
Internal Revenue Service. Consequences to a Participant Who Makes Excess Annual Salary Deferrals
8
Internal Revenue Service. Fixing Common Plan Mistakes – Failure to Limit Contributions for a Participant
9
Internal Revenue Service. Calculation of Plan Compensation for Sole Proprietorships
10
Office of the Law Revision Counsel. 26 U.S. Code 414 – Definitions and Special Rules
11
Internal Revenue Service. Issue Snapshot – 403(b) Plan – Application of IRC Section 415(c) When a 403(b) Plan Is Aggregated with a Section 401(a) Defined Contribution Plan
12
Internal Revenue Service. EPCRS Overview
13
Internal Revenue Service. Instructions for Forms 1099-R and 5498 (2025)
14
Internal Revenue Service. Correcting Plan Errors
15
IRS. Guidance on Section 305 of the SECURE 2.0 Act