Retirement Savings and Income Planning accounts for 18% of your CFP exam score. Yet a single, pervasive myth about how 457(b) plan limits work causes a shocking number of candidates to lose points they were sure they had earned. Most incorrectly believe only governmental 457(b) plans have a separate contribution limit; the exam ruthlessly punishes this flawed assumption.
For the 2026 CFP exam, the key contribution limits are the §402(g) employee deferral ($24,000), the age 50+ catch-up ($8,000), and the §415(c) overall limit ($70,000). Critically, both governmental and non-governmental 457(b) plans have their own separate $24,000 deferral limit, a fact that is a common exam trap.
Key facts
- Official Body: Certified Financial Planner Board of Standards, Inc. (CFP Board)
- Exam Section: Retirement Savings and Income Planning (Principal Knowledge Topic 7)
- Section Weighting: 18% of the total exam score
- 2026 Deferral Limit (§402(g)): $24,000 (projected, confirm with IRS)
- 2026 Age 50+ Catch-Up (§414(v)): $8,000 (projected)
- 2026 Overall Limit (§415(c)): $70,000 or 100% of compensation (projected)
- Pass Rate: Historically 60-65% across all exam administrations, per the CFP Board.
Why Do Contribution Limits Derail So Many CFP Candidates?
Contribution limits are the IRS-mandated caps on deposits into tax-advantaged retirement plans, governed primarily by Internal Revenue Code sections §402(g), §414(v), and §415(c). The CFP exam tests these not as trivia, but as the core logic for client recommendations. A candidate who only memorizes the numbers will fail the application-based questions that make up this section.
You won't be asked, "What is the 401(k) limit?"
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Instead, you'll get a mini-case study about a client with multiple jobs, different plan types, and a goal to maximize savings. Your task is to navigate the overlapping but distinct rules to find the single correct maximum contribution.
The single biggest mistake is misapplying aggregation rules. You might correctly recall the §402(g) deferral limit but fail to recognize that both types of 457(b) plans have their own separate limit. This is a classic exam trap designed to separate candidates who memorized from those who truly understand the tax code's structure. Getting this wrong can cause a domino effect through a case study, costing you multiple points from one flawed assumption.
Which Contribution & Catch-Up Rules Must You Master for the Exam?
The exam requires a precise, working knowledge of several interlocking contribution rules. Here are the core concepts, with projected 2026 figures. Note: The IRS adjusts these for inflation annually; always confirm the limits for the year being tested.
H3: Core Limits: 401(k), 403(b), and the §402(g) Deferral Cap
These are the most common plans and their limits form the baseline for your analysis.
- Employee Elective Deferral (§402(g) limit): For 2026, this is $24,000. This is the maximum an employee can defer from their paycheck into a 401(k) or 403(b) plan. This is an individual limit, not a per-plan limit. If a client has two jobs with 401(k)s, their total deferral across both cannot exceed $24,000.
- Age 50+ Catch-Up (§414(v) limit): If a client is age 50 or older by December 31st, they can contribute an additional $8,000. This brings their potential employee contribution to a 401(k) or 403(b) to $32,000.
H3: The 457(b) Anomaly: Where Most Candidates Get It Wrong
This is the single most misunderstood rule in this topic area. The exam writers know this and exploit it.
The critical rule is that deferrals to a 457(b) plan—whether governmental or non-governmental—do not count against the §402(g) limit for 401(k)s and 403(b)s. They have their own, separate $24,000 limit.
- Governmental 457(b) Plans: Offered by state and local governments. An eligible employee can contribute the maximum to both their 403(b) and their governmental 457(b).
- Non-Governmental (Tax-Exempt) 457(b) Plans: Offered by non-profits like hospitals or unions. The same rule applies: the contribution limit is separate. A doctor working for a non-profit hospital can max out her 403(b) at $24,000 AND her non-governmental 457(b) at $24,000.
This is a massive opportunity for clients and a massive trap for unprepared candidates.
H3: The Special 457(b) Catch-Up vs. the Age 50+ Catch-Up
In the three years prior to the plan's stated Normal Retirement Age, a participant in any 457(b) plan can contribute more. The special catch-up allows a contribution of up to twice the annual deferral limit ($48,000 in 2026), but only to the extent the participant under-contributed in prior years.
> ⚠️ Exam trap: A participant cannot use the special 457(b) catch-up and the age 50+ catch-up in the same year. They must choose the one that results in a larger contribution. The exam will often present a scenario where a client is eligible for both, forcing you to calculate and compare.
H3: The Absolute Ceiling: How IRC §415(c) Works
This is the absolute cap on total contributions to a defined contribution plan from all sources for a single year. The §415(c) limit for 2026 is the lesser of 100% of compensation or $70,000.
This "annual additions" limit includes:
- Employee pre-tax and Roth deferrals (but not catch-up contributions).
- Employer matching and profit-sharing contributions.
- After-tax employee contributions.
This rule enables strategies like the "Mega Backdoor Roth," where a client maxes out pre-tax deferrals and then contributes after-tax dollars up to the §415(c) limit. Understanding the components of "annual additions" is key to answering advanced questions about high-income clients. For a deeper dive, review our guide on CFP Roth conversion strategies.
H3: Other Plan Limits: SIMPLE and SEP IRAs
While less complex, be aware of these plans.
- SIMPLE IRA/401(k): For 2026, the employee deferral is $16,500, with a $3,500 age 50+ catch-up. An employee generally cannot contribute to another employer's plan if their primary employer offers a SIMPLE plan.
- SEP IRA: Only the employer can contribute, up to the lesser of 25% of compensation or the §415(c) limit ($70,000 for 2026). There are no employee deferrals or catch-up contributions.
| Plan Type | 2026 Deferral Limit | 2026 Age 50+ Catch-Up | Aggregates with 401(k) §402(g) limit? |
|---|---|---|---|
| 401(k) / 403(b) | $24,000 | $8,000 | N/A |
| Governmental 457(b) | $24,000 | $8,000 | No |
| Non-Gov't 457(b) | $24,000 | $8,000 | No |
| SIMPLE IRA | $16,500 | $3,500 | Yes (in aggregate) |
Ready to see how you stack up? VoraPrep's adaptive learning engine has over 6,900 questions that target these tricky concepts until they become second nature. Try VoraPrep's free CFP practice questions.
How Do You Apply These Limits in a Case Study?
Let's apply these rules to a realistic, exam-style scenario. This is how the CFP Board tests your judgment, not just your memory.
> 💡 Worked example: > Dr. Anya Sharma, age 52, is a professor at a state university and also works part-time at a private clinic. > - The state university offers both a 403(b) plan and a governmental 457(b) plan. > - The private clinic offers a 401(k) plan. > - Her compensation from the university is $150,000, and from the clinic is $80,000. > Assuming 2026 limits, what is the absolute maximum amount Anya can contribute to her various retirement plans as an employee?
This question is designed to overwhelm you. The key is to break it down systematically.
Step 1: Identify the Plan Types and Associated Limits
First, list the plans and their governing rules:
- 403(b) and 401(k): These fall under the same §402(g) limit. The total she can defer between these two plans is $24,000.
- Governmental 457(b): This plan has its own separate limit, also $24,000.
- Age 50+ Catch-Up: Because she is over 50, she has a single, additional $8,000 catch-up contribution available across all eligible plans.
Step 2: Calculate the Base Deferrals
Start with the standard limits, applying the aggregation rules correctly.
- 401(k)/403(b) Limit: She can contribute a combined total of $24,000 to her 401(k) and 403(b).
- 457(b) Limit: Because it's a 457(b) plan, this limit is separate. She can contribute another $24,000 to this plan.
Total base deferral = $24,000 (from 401k/403b) + $24,000 (from 457b) = $48,000.
Step 3: Apply the Catch-Up Contribution
Now, account for the age 50+ catch-up.
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- The §414(v) catch-up is a single $8,000 amount per taxpayer, per year. She can apply it to her 401(k), 403(b), or 457(b) contributions, but the total catch-up cannot exceed $8,000.
Step 4: Calculate the Final Maximum Contribution
Combine the base deferrals and the catch-up.
- Maximum Contribution = Total Base Deferral + Age 50+ Catch-Up
- Maximum Contribution = $48,000 + $8,000 = $56,000
The correct answer is $56,000.
> ⚠️ Exam trap: The Tempting Wrong Answer > A common wrong answer choice would be $32,000. A candidate arrives at this by correctly calculating the 401(k)/403(b) limit ($24,000) plus the catch-up ($8,000) but incorrectly assumes the 457(b) plan limit is aggregated and cannot be used. This mistake demonstrates a failure to apply the specific exception for 457(b) plans.
Can You Solve These Exam-Style Practice Questions?
Theory is one thing; applying it under pressure is another. Here are a few sample questions structured like those on the real exam.
Question 1 Maria, a 48-year-old hospital administrator, participates in her employer's 403(b) plan and a separate non-governmental 457(b) plan. In 2026, she wants to maximize her elective deferrals. What is the total maximum amount she can defer across both plans? A) $24,000 B) $32,000 C) $48,000 D) $56,000> Explanation: The correct answer is C. This question directly tests the most common trap. Deferrals to a non-governmental 457(b) plan are not aggregated with the §402(g) limit for 403(b) plans. Maria can contribute $24,000 to her 403(b) and another separate $24,000 to her 457(b) plan. Total = $24,000 + $24,000 = $48,000. She is not yet 50, so no catch-up is available.
Question 2 David, age 54, is the sole owner and employee of his S-corporation. In 2026, he pays himself W-2 compensation of $300,000 and has a solo 401(k) plan. What is the absolute maximum contribution he can make to his solo 401(k) in 2026 from all sources (employee and employer)? A) $70,000 B) $32,000 C) $78,000 D) $62,000> Explanation: The correct answer is C. This question tests the interaction between deferrals, employer contributions, and the §415(c) limit. First, calculate the maximum "annual additions," which is the lesser of 100% of compensation or $70,000. This is composed of his employee deferral ($24,000) and the maximum employer contribution ($46,000). Crucially, the age 50+ catch-up contribution under §414(v) is not subject to the §415(c) limit. Therefore, David can contribute the $70,000 in annual additions PLUS his $8,000 catch-up, for a total of $78,000.
Question 3 Jessica, 38, earns a salary of $250,000 and wants to contribute the absolute maximum amount allowed to her company's 401(k) plan in 2026, which allows for after-tax contributions. Her employer makes no matching contributions. How much can she contribute in total? A) $70,000 B) $24,000 C) $32,000 D) $94,000> Explanation: The correct answer is A. This question tests the §415(c) limit in the context of after-tax contributions. Jessica can make a $24,000 pre-tax or Roth deferral. Since her employer makes no contribution, the remaining space up to the $70,000 overall limit can be filled with after-tax contributions. Therefore, she can contribute $24,000 (deferral) + $46,000 (after-tax) = $70,000. She is not yet 50, so no catch-up is available.
You can find hundreds more questions covering every nuance of retirement planning in the VoraPrep CFP question bank.
What's the Most Effective Way to Study These Rules?
Knowing the rules is half the battle. Applying them under a time limit is the other half. Use this 7-day sprint to turn this topic into a strength.
Day 1: Master the Core
Focus only on the big three: §402(g) deferral limit, §414(v) age 50+ catch-up, and the §415(c) annual additions limit. Write down the numbers and what is included in each. Do 20 practice questions on just these rules.
Day 2-3: Deep Dive on 457(b) Plans
This is where points are won and lost. Spend two full days on this. Draw a diagram showing that both Governmental and Non-Governmental 457(b) plan limits are separate from the §402(g) limit. Then, study the special 457(b) catch-up and its interaction with the age 50+ catch-up. Complete at least 30 practice questions that mix and match these plan types.
Day 4: Focus on §415(c) and Solo 401(k)s
Work through scenarios involving employer profit sharing, matching, and after-tax contributions. Calculate the maximum "annual additions" and then add the catch-up on top. This is a purely computational skill that requires repetition.
Day 5-6: Mixed Problem Sets
Use a tool like VoraPrep, which can create custom quizzes, to do timed sets of 15-20 questions that pull from all of these concepts. This simulates exam pressure and forces you to quickly identify which rule applies. The goal is speed and accuracy.
Day 7: Final Review & Cheat Sheet
Create a one-page table with every plan type, its limits, and its aggregation rules. Hand-writing this forces the information into your memory. Review it, then do one last 20-question quiz to lock it in.