News · November 13, 2026, 06:30 UTC
The Internal Revenue Service announced on Nov.
12, 2026, that the annual employee contribution limit for 401(k) plans will rise to $25,500 for tax year 2027, up from $24,500 in 2026. The same $25,500 ceiling applies to 403(b) plans, governmental 457 plans and the federal government’s Thrift Savings Plan, the agency said in Notice 2026-66.
The increase reflects inflation adjustments to pension and retirement-related dollar limits, while the IRA contribution limit stays at $7,500. In addition, the IRA catch-up amount for savers aged 50 and older remains $1,100, according to the IRS guidance issued in Washington.
What happened
The $1,000 increase in the elective deferral limit was confirmed in the IRS announcement and reported by Bloomberg Law, SHRM and USA TODAY.
The catch-up contribution limit for employees aged 50 and older in most 401(k), 403(b), governmental 457 plans and the Thrift Savings Plan rises to $8,500 for 2027 from $8,000 in 2026, the IRS said. That means participants aged 50 and older can generally contribute up to $34,000 starting in 2027.
A higher catch-up limit created under the SECURE 2.0 Act of 2022 applies to employees aged 60 through 63. For 2027, that amount is $11,750, up from $11,250 in 2026, which the IRS said pushes the maximum contribution for that group to $37,250.
The agency also raised income ranges for deducting traditional IRA contributions and for contributing to Roth IRAs.
For single taxpayers covered by a workplace plan, the traditional IRA deduction phase-out rises to $83,000 to $93,000, from $81,000 to $91,000 for 2026. Roth IRA eligibility phases out between $158,000 and $173,000 for single filers, up from $153,000 to $168,000, and between $250,000 and $260,000 for married couples filing jointly, up from $242,000 to $252,000.
IRS Chief Executive Officer Frank J. Bisignano said the adjustment would help American families keep more of their income and give taxpayers and employers the information needed for retirement planning.
SHRM noted that the announcement came after most organizations had already begun open enrollment for the coming year, though employees can usually adjust contribution rates during the year.
Analysis: Why it matters for investors
The higher deferral ceiling gives workers who can afford to save more room to shield income from current taxes, since 401(k) contributions are made before tax and withdrawals are taxed later.
For high earners, the larger Roth IRA phase-out ranges may modestly widen access to after-tax retirement accounts, depending on individual circumstances.
The practical effect may be limited. USA TODAY, citing Vanguard’s annual How America Saves report, said only 14% of account holders at the fund company maxed out their contributions last year, and those savers tended to be older and higher earners.
Advisers quoted in the report emphasized capturing any employer match and saving consistently rather than reaching the cap.
For markets, the change is a routine cost-of-living adjustment rather than a signal about policy direction. Any effect on retirement flows would depend on how many participants raise deferral rates, which has not been disclosed.
Who is affected
Employees in 401(k), 403(b), governmental 457 plans and the Thrift Savings Plan are subject to the new $25,500 limit for 2027. Workers aged 50 and older can add the $8,500 catch-up, and those aged 60 to 63 can use the $11,750 super catch-up instead.
IRA savers see no change to the $7,500 contribution cap or the $1,100 catch-up, though income phase-out ranges for traditional and Roth IRAs moved higher. Employers and plan administrators will need to update payroll systems and benefits communications, SHRM reported.
What is still uncertain
The total limit on combined employer and employee contributions to defined contribution plans has not been clearly disclosed in the available materials; SHRM reported a figure of $75,000 but described it as applying to 2026 while comparing it with $72,000 for the same year, leaving the 2027 number unclear.
How many workers will actually increase contributions, and what that means for aggregate retirement savings, is also unknown.
Conclusion: What to watch next
Plan sponsors will likely update enrollment materials and payroll settings ahead of the 2027 plan year. Investors may watch whether participation rates and deferral levels shift in response to the higher limits, and whether future inflation adjustments continue at a similar pace.
The IRS guidance in Notice 2026-66 remains the reference document for plan administrators.
Frequently Asked Questions
What is the 401(k) contribution limit for 2027?
The IRS said employees can contribute up to $25,500 to 401(k) plans in 2027, up from $24,500 in 2026. The same limit applies to 403(b) plans, governmental 457 plans and the Thrift Savings Plan.
Did the IRA limit change for 2027?
No. The IRA contribution limit remains $7,500 for 2027, and the catch-up contribution for those aged 50 and older stays at $1,100, according to the IRS.
How much can savers aged 50 and older contribute in 2027?
The catch-up limit for most 401(k), 403(b), governmental 457 plans and the Thrift Savings Plan rises to $8,500 from $8,000, allowing up to $34,000 in total contributions. Workers aged 60 to 63 can use an $11,750 catch-up, for a maximum of $37,250.
When did the IRS announce the 2027 limits?
The IRS announced the 2027 retirement plan limits on Nov. 12, 2026, in Notice 2026-66. The agency said the adjustments account for inflation.
Did Roth IRA income limits change for 2027?
Yes. Roth IRA eligibility phases out between $158,000 and $173,000 for single filers, up from $153,000 to $168,000, and between $250,000 and $260,000 for married couples filing jointly, up from $242,000 to $252,000.
AI Notice: This article was created wholly or predominantly with the assistance of artificial intelligence and was published without human editorial review.
This article is for general information only and does not constitute investment advice. Always do your own research before making trading decisions.