Workers can contribute up to $25,500 to their 401(k) plans in 2027, representing a $1,000 increase from the $24,500 cap enforced in 2026, according to an announcement by the IRS on Thursday.
The federal agency adjusted the contribution thresholds to account for inflation via Notice 2026-66. Fox Business reported that the updated limits apply across multiple workplace savings vehicles, giving individuals additional capacity to shelter income in tax-advantaged accounts.
Retirement Contribution Targets for 2027
- Standard 401(k) Deferral: Rises to $25,500, up from $24,500 in 2026.
- Catch-Up Limit (Ages 50 and over): Increases by $500 to $8,500, bringing total capacity to $34,000.
- Super Catch-Up Limit (Ages 60-63): Remains at $11,750, allowing total contributions up to $37,250 under SECURE 2.0 provisions.
- Individual Retirement Accounts (IRAs): Stays flat at $7,500, with a $1,100 catch-up limit for savers 50 and older.
IRS Increases Pension Limitations to Help Families
CNBC pointed out that these figures do not include employer-matching contributions.
“Along with the Working Families Tax Cuts, this increase in the pension limitations will help American families keep more of their hard-earned income,” said Frank J. Bisignano, IRS Chief Executive Officer, in a statement published by Fox Business.
“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,” IRS Chief Executive Officer Frank J. Bisignano said.
For older participants, the rules diverge by age bracket. CNBC highlighted that workers aged 50 to 59 face a standard catch-up limit of $8,500. Meanwhile, participants aged 60 to 63 utilize an enhanced catch-up threshold of $11,750, as established by the SECURE 2.0 Act of 2022.
Income Phase-Out Adjustments for Tax-Advantaged Accounts
While employer-sponsored accounts see higher caps, traditional and Roth IRA contribution limits remain unchanged at $7,500 for 2027, alongside an unadjusted $1,100 catch-up cap for individuals 50 and older. However, income thresholds governing eligibility have shifted.
| Account Type | 2026 Limit | 2027 Limit |
|---|---|---|
| Standard 401(k) / 403(b) / 457 | $24,500 | $25,500 |
| 401(k) Catch-Up (Ages 50+) | $8,000 | $8,500 |
| 401(k) Super Catch-Up (Ages 60–63) | $11,250 | $11,750 |
| Traditional / Roth IRA | $7,500 | $7,500 |
Few Participants Reach Maximum Contribution Levels
Data indicates that hitting these maximum contribution levels remains uncommon among typical earners. According to Vanguard metrics cited by CNBC, only 14% of plan participants maxed out their 401(k) accounts in 2025. Approximately 19% of employees failed to defer enough income during early 2026 to secure their full corporate matching contribution.
“Before worrying about contribution limits, make sure you’re capturing your full employer match,” said Sean Michael Pearson, a certified financial planner with Ameriprise Financial Services in Conshohocken, Pennsylvania, in an interview with CNBC.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
