- The defined-contribution annual-additions ceiling rises to $75,000 for 2027.
- The standard SIMPLE salary-reduction limit increases to $17,500.
Checked against the IRS
The IRS set the 2027 401(k) Contribution Limit at $25,500, up from $24,500 in 2026. The new ceiling applies to employee contributions beginning in the 2027 tax year.
Employees aiming for the maximum can prepare through payroll. Experts recommend changing a savings rate in December so it takes effect by the first January paycheck; processing may take one or two pay periods.
The agency announced the change on November 12, 2026, in News Release IR-2026-136. It also issued Notice 2026-66, which sets out the technical cost-of-living adjustments for retirement plans and related accounts.
The $25,500 cap is the employee elective-deferral limit under Section 402(g). It covers 401(k), 403(b), governmental 457 plans and the federal Thrift Savings Plan. A separate defined-contribution annual-additions ceiling rises to $75,000 for 2027.
Age-based catch-ups raise the workplace-plan maximum
Participants aged 50 and older generally may contribute an additional $8,500 in 2027, up from $8,000 in 2026. Combined with the standard deferral limit, that generally allows total employee contributions of $34,000.
A higher catch-up applies to participants who attain age 60, 61, 62 or 63 in 2027. Their catch-up limit is $11,750, making the total elective-deferral limit $37,250 when combined with the standard amount.
| Participant age in 2027 | Catch-up limit | Total with standard $25,500 limit |
|---|---|---|
| 50 and older, generally | $8,500 | $34,000 |
| Attains age 60, 61, 62 or 63 | $11,750 | $37,250 |
The higher age-based amount applies in the listed 401(k), 403(b), governmental 457 and federal Thrift Savings plans. Notice 2026-66 excludes specified SIMPLE plans from that enhanced limit.
IRA and SIMPLE accounts have separate 2027 limits
The annual IRA contribution limit stays at $7,500 for 2027. People aged 50 and older may make an IRA catch-up contribution of $1,100, also unchanged.
Income limits for traditional IRA deductions and Roth IRA contributions vary by filing status and income. Workplace-plan coverage also affects whether a traditional IRA contribution may be deducted. The adjusted income ranges for 2027 are in the agency’s notice.
SIMPLE plan salary-reduction limits move to $17,500, up from $17,000 in 2026. Certain applicable accounts have a higher limit of $19,100, up from $18,100. Their catch-up amounts remain separate: $4,000 generally for participants aged 50 and older, $3,850 in certain applicable plans, and $5,250 for participants aged 60 through 63.
The Saver’s Match is scheduled to take effect for taxable years beginning after December 31, 2026. It generally replaces the Saver’s Credit for qualifying retirement-plan and IRA contributions, while the credit remains available for qualifying ABLE contributions. The notice also raises the Saver’s Credit income limits for ABLE contributions made after that date.
A December payroll change can prepare contributions for January
Sean Michael Pearson, a certified financial planner with Ameriprise Financial Services in Conshohocken, Pennsylvania, said savers should first consider whether they receive their full employer match.
“Before worrying about contribution limits, make sure you’re capturing your full employer match,” Pearson said.
Workers who plan to reach the 2027 maximum can adjust their savings rate in December, experts recommend. Payroll systems may need one or two pay periods to apply the change, so an earlier update can help put the new rate in place by the first January paycheck.
This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional or CPA about your specific situation.
