IRS raises the 2027 401(k) contribution limit to $25,500 and keeps the IRA limit at $7,500

Workers will be able to put up to $25,500 into a 401(k) plan in 2027, $1,000 more than in 2026, the Internal Revenue Service announced on November 12. The same limit applies to 403(b) plans, governmental 457 plans and the federal Thrift Savings Plan. The IRS set out the figures for 2027 in Notice 2026-66, its annual cost-of-living update for retirement plans.

The retirement limits were not part of the 2027 tax brackets and standard deduction the IRS published on November 5.

Workplace plans

The catch-up contribution for most plan participants aged 50 and over rises to $8,500 from $8,000, so those savers can generally contribute up to $34,000 in 2027. Under the SECURE 2.0 Act of 2022, people who turn 60, 61, 62 or 63 during the year get a higher catch-up limit, which rises to $11,750 from $11,250. A year ago the IRS raised the basic limit by the same $1,000, from $23,500 for 2025.

The notice also raises the wage threshold that decides whether a saver's catch-up contributions must be designated as Roth contributions. The notice calls it the Roth catch-up wage threshold for 2026 and uses it for catch-up contributions for 2027; it rises to $155,000 from $150,000. Plans under sections 408(k) and 408(p) of the tax code, the provisions for SEP and SIMPLE plans, are excluded, according to the notice.

For SIMPLE retirement accounts, the contribution limit rises to $17,500 from $17,000, and to $19,100 from $18,100 for certain plans that SECURE 2.0 allows to accept more. SIMPLE catch-up limits do not change. The overall annual limit for defined contribution plans under section 415(c) of the tax code rises to $75,000 from $72,000.

IRAs and the income limits

The limit for individual retirement accounts stays at $7,500 for 2027, and the extra catch-up amount for people aged 50 and over stays at $1,100. SECURE 2.0 added an annual cost-of-living adjustment to that catch-up. The income ranges that limit who can deduct traditional IRA contributions or put money into a Roth IRA rise, as the table shows, except for married people filing separately.

The deduction phase-outs apply only when the saver or the saver's spouse is covered by a retirement plan at work, the IRS says. The married-filing-separately ranges are not adjusted for inflation.

Saver's Credit gives way to Saver's Match

The notice marks a change for low- and moderate-income savers. From tax years beginning after December 31, 2026, Saver's Match contributions under section 6433 of the tax code replace the Saver's Credit for elective contributions to qualifying retirement plans and IRAs, the notice says in a footnote. The credit remains available for contributions to ABLE accounts.

For those ABLE contributions, the IRS says, the income limit for the credit rises to $83,000 for married couples filing jointly, from $80,500, to $62,250 for heads of household, from $60,375, and to $41,500 for single filers and married people filing separately, from $40,250.

With the new adjustment in place now, the IRS is giving taxpayers and employers the information needed to make retirement planning decisions for the year ahead.

By our arithmetic, the $1,000 rise in the 401(k) limit is an increase of about 4.1%. The notice lists the other 2027 amounts for plan sponsors, including a defined benefit plan limit of $300,000 and a highly compensated employee threshold of $170,000. Notice 2026-66 is the IRS's reference for how each limit applies.