Workers can contribute up to $25,500 to a 401(k) in 2027, an increase of $1,000 from the previous year, as the Internal Revenue Service rolled out its annual cost-of-living adjustments.
Raising 401(k) and Thrift Savings Plan Deferral Limits for 2027
The updated contribution cap applies to traditional and Roth 401(k) accounts, 403(b) plans, most 457 plans, and the federal Thrift Savings Plan. The $1,000 bump lifts the employee deferral limit from $24,500 in 2026 to $25,500 for the coming tax year, according to administrative guidance released in Notice 2026-66.
Savers age 50 and older get a larger catch-up contribution ceiling, rising by $500 to $8,500. That adjustment allows older workers to tuck away a total of $34,000 annually in qualifying accounts.
Employees aged 60 through 63 face a distinct tier authorized by the SECURE 2.0 Act. Their enhanced catch-up limit climbs to $11,750, bringing their maximum possible annual employee deferral to $37,250.
“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.”
Frank Bisignano
Bisignano said the agency released the figures to give taxpayers and employers the information needed for upcoming financial planning.
Updating IRA Contribution Caps and Income Phase-Outs
The basic contribution limit for Individual Retirement Accounts remains parked at $7,500. The catch-up contribution for IRA holders 50 and older stays fixed at $1,100, resulting in a total IRA savings cap of $8,600 for eligible older savers.
The income thresholds determining who qualifies for tax deductions and Roth contributions shifted upward. Single filers covered by a workplace retirement plan face a traditional IRA phase-out range moving to between $83,000 and $93,000.
For Roth IRA direct contributions, single filers and heads of household find their eligibility phase-out range climbing to between $158,000 and $173,000. Married couples filing jointly see their phase-out bracket expand to between $250,000 and $260,000.
Married individuals filing separate tax returns who contribute to a Roth IRA remain subject to a fixed phase-out range between $0 and $10,000.
The tax-deferred savings limit for pension-linked emergency savings accounts increased from $2,600 to $2,700.
The standard salary reduction contribution limit increased to $17,500.
Adjusted gross income thresholds for the saver’s credit move higher for low- and moderate-income workers, reaching $83,000 for married couples filing jointly.
The threshold is $62,250 for heads of household.
The threshold is $41,500 for single filers and married individuals filing separately.
Targeting Employer Matching and Saver Strategies
Only a fraction of participants max out their accounts, and matching dollars represent immediate compensation.
“Before worrying about contribution limits, make sure you’re capturing your full employer match.”
Sean Michael Pearson
Pearson said to capture the full match first.
Pearson said auto-escalation policies and incremental bumps are critical habits for long-term accumulation. Raising contributions by 1% annually creates substantial gains over time with minimal impact on an immediate paycheck.
Earlier coverage: Social Security 2027 Earnings Limit Set to $25,560 for Retirees
