IRS Raises 401(k) Limit to $25,500 for 2027, Holds IRA Limit at $7,500

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The Internal Revenue Service on Thursday raised the amount workers can put into a 401(k) next year, increasing the employee contribution limit to $25,500 for 2027 from $24,500 in 2026, in cost-of-living guidance that also lifts catch-up contributions for older workers while leaving the IRA limit unchanged at $7,500. The new limits, announced in news release IR-2026-136 with the full technical figures in Notice 2026-66, apply to the 2027 tax year.

The $25,500 limit covers employees who participate in 401(k) plans, 403(b) plans, governmental 457 plans and the federal government’s Thrift Savings Plan, the IRS said. Workers 50 and over can add a catch-up contribution of $8,500, up from $8,000, for a total of $34,000, and workers who turn 60, 61, 62 or 63 in 2027 qualify for the higher catch-up of $11,750, up from $11,250, for a total of $37,250. The overall limit on contributions to a defined contribution plan, including employer money, rises to $75,000 from $72,000, and the limit for SIMPLE retirement accounts increases to $17,500 from $17,000.

Individual retirement accounts, by contrast, do not move. The annual IRA contribution limit stays at $7,500 and the catch-up contribution for savers aged 50 and over stays at $1,100, the IRS said, even though the income ranges around IRAs shift higher. The phase-out range for Roth IRA contributions rises to between $158,000 and $173,000 for singles and heads of household, from between $153,000 and $168,000, and to between $250,000 and $260,000 for married couples filing jointly, from between $242,000 and $252,000. For workers covered by a workplace plan, the deduction for traditional IRA contributions phases out between $83,000 and $93,000 for single filers and between $133,000 and $153,000 for joint filers, the notice said.

The adjustments are the retirement counterpart to the 2027 tax brackets and standard deduction the IRS published on November 5, and they follow the inflation formulas written into the tax code, which track third-quarter consumer prices. “This increase in the pension limitations will help American families keep more of their hard-earned income,” IRS chief executive Frank Bisignano said in the release, adding that publishing the figures now lets taxpayers and employers plan for the year ahead.

Only a minority of savers will use the full room: USA Today reported that just 14 percent of participants in Vanguard 401(k) accounts contributed the maximum last year. The practical step for everyone else is narrower, resetting a deferral percentage during open enrollment or before the first January paycheck so the higher ceiling applies from the start of the year. Readers can model the effect with the site’s retirement calculator and follow guidance on the Tax & Policy desk.

Educational coverage — not tax or investment advice.