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Compliance December 17, 2025
IRS Issues Covered Compensation Tables for 2026 Plan Year
The documents contain information on the permitted disparities in employer-provided contributions or benefits.
Reported by Emily Boyle
The IRS released on December 12 the covered compensation tables which plan sponsors can reference to determine 2026 benefits for qualified plans that offer additional contributions or accruals to employees whose compensation exceeds certain levels.
The tables, listed in Revenue Ruling 2026-01, show the covered compensation amounts for “permitted disparity” benefits, which allow for larger contributions or accruals in excess of the Social Security wage base, without violating applicable nondiscrimination requirements.
The ruling stated that the taxable wage base for determining covered compensation in 2026 is $184,500, up from $176,100 in 2025.
One table lists the unrounded covered compensation based on an employee’s calendar year of birth and calendar year of Social Security retirement age. The other table provides the rounded compensation based on the employee’s calendar of year of birth.
Covered compensation is defined by Section 401(I)(5)(E)(i) of the Internal Revenue Code. The covered compensation takes the average of the taxable wage base for each calendar year during the 35-year period ending with the last day of the calendar year in which the employee reaches Social Security retirement age.