The Internal Revenue Service (IRS) announced on November 12 that the annual contribution limit for 401(k) plans will rise to $25,500 in 2027, up from $24,500 in 2026. The increase applies to 403(b) plans, governmental 457 plans, and the federal Thrift Savings Plan, according to an IRS statement.
Workers aged 50 and older can contribute an additional $8,500 as a catch-up contribution, bringing their total potential savings to $34,000 in 2027. Those between ages 60 and 63 will have an even higher catch-up limit of $11,750, allowing total contributions of $37,250 next year. The standard IRA contribution limit remains unchanged at $7,500, with a $1,100 catch-up limit for those 50 and older.
The IRS cited the Working Families Tax Cuts, part of the One Big Beautiful Bill Act, as a factor in the adjustment, stating that the changes aim to help Americans retain more of their income. The agency emphasized that the updates provide clarity for taxpayers and employers planning retirement contributions.
Key changes for 2027:
- Standard 401(k) limit: $25,500 (up from $24,500)
- Catch-up for ages 50+: $8,500 (up from $8,000)
- Catch-up for ages 60–63: $11,750 (up from $11,250)
- Total for ages 60–63: $37,250
- IRA limits: No change ($7,500 standard, $1,100 catch-up)
The IRS also noted that workers earning over $155,000 in 2026 must make 2027 catch-up contributions as Roth contributions, meaning taxes are paid upfront rather than deferred. Additionally, a federal matching program called the Saver’s Match will provide up to $1,000 annually to eligible low- and moderate-income workers, matching up to 50% of the first $2,000 in retirement contributions.
The adjustments follow annual cost-of-living adjustments and aim to support retirement savings amid economic shifts. Employers offering 401(k) plans must permit catch-up contributions for eligible employees to utilize the higher limits.