Annual additions limit (415(c) limit)

What the 415(c) limit is

Annual additions are everything added to a participant’s account for the year: the employee’s pre-tax and Roth deferrals, after-tax contributions, employer match, profit sharing and other employer contributions, and any forfeitures allocated to them. For 2026 the total cannot exceed the lesser of $72,000 or 100% of the participant’s compensation.

For 2027 it rises to $75,000. (IRS Notice 2026-66)

Catch-up contributions sit outside the limit. Rollovers into the plan and investment earnings do not count either.

Why it matters to employers

This limit is tested per employer, and all plans of a controlled group are combined. It matters most for owners and high earners who receive large profit sharing contributions, and for plans that allow after-tax contributions for a mega backdoor Roth. Going over is a plan qualification error that has to be corrected.

Example with 2026 figures

A 45-year-old owner defers $24,500. The company matches $14,400 and wants to add profit sharing. The most it can add is $72,000 minus $24,500 minus $14,400, or $33,100. At age 52, the same owner could also make an $8,000 catch-up contribution, for $80,000 in total.

Common mistakes

• Forgetting the 100% of pay rule. A part-time employee who earns $20,000 cannot receive more than $20,000 in annual additions, however the plan formula works out.

• Counting only employer money. Employee deferrals and after-tax contributions are part of the limit.

• Testing each plan separately when related companies sponsor more than one.

• Using a limitation year that differs from the plan year without realizing it. Most plans set them to match.