On November 12, President Trump signed Pub. L. 119-37, which reopened the federal government. This ended the longest shutdown in U.S. history. The new law funds the government through January 30, 2026. Some federal agencies that had been operating with limited resources are now in the process of reopening. The announcement of the pension cost-of-living adjustments (COLAs) came shortly after the government reopened.
Pension COLAs
The IRS announced the changes to the dollar limits on benefits and contributions under qualified retirement plans, as well as other items, for tax year 2026 [Notice 2025-67, 11-13-25].
IRC §415, which provides for dollar limits on benefits and contributions under qualified retirement plans, requires that the IRS annually adjust these limits for cost-of-living changes. The IRC also requires various other amounts to be adjusted at the same time and in the same manner as these dollar limits.
The limitation on the exclusion for elective deferrals under §402(g)(1) (e.g., §401(k) and §403(b) plans) increases to $24,500 (from $23,500).
For More Information
For more information, see the PAYO Compliance Update, 2026 Pension COLAs Announced, Federal Government Reopens. Compliance updates are emailed to PayrollOrg members and are also available on the Compliance Updates webpage.
To learn more about federal and state laws, regulations, and information to keep your company's payroll operations in compliance, check out Payroll Source Plus!
Rayna Alexander, Esq., is Editor of Payroll Information Resources for PayrollOrg.
