IRS Sets 2027 Retirement Limits, Boosting 401(k) Contribution Cap to $25,500

The Internal Revenue Service (IRS) has announced the official inflation-adjusted retirement savings limits for 2027. Headlining these updates, the maximum contribution limit for 401(k) plans has risen by $1,000, reaching $25,500 for the upcoming year, up from $24,500 in 2026. This adjustment helps workers accelerate their retirement savings in line with inflation.

IRS Chief Executive Officer Frank J. Bisignano highlighted the broader impact of these adjustments, stating, “Along with the Working Families Tax Cuts, this increase in the pension limitations will help American families keep more of their hard-earned income.” He added that the IRS is delivering these critical parameters early to empower taxpayers and employers to make highly informed retirement planning decisions for the year ahead.

The IRS has increased the amount workers can contribute to their 401(k), up $1,000 from last year. (Getty iStock / Getty Images)

Looking at other retirement vehicles, the contribution limit for Individual Retirement Accounts (IRAs) will remain unchanged at $7,500 for 2027. For savers aged 50 and over, the IRA catch-up contribution limit will hold steady at $1,100, a threshold amended under the SECURE 2.0 Act of 2022 to incorporate an annual cost-of-living adjustment.

Simultaneously, the catch-up contribution limit for workers aged 50 and over participating in most 401(k), 403(b), governmental 457 plans, or the federal government’s Thrift Savings Plan has increased by $500, rising to $8,500.

The IRS inflation-adjusted the 2027 limit to $25,500, a boost from 2026’s $24,500 limit. (Kevin Carter/Getty Images, File / Getty Images)

The IRA catch-up contribution limit for individuals aged 50 and over, adjusted annually for inflation under the SECURE 2.0 Act, remains at $1,100. For the broader retirement plans—including 401(k)s, 403(b)s, and the Thrift Savings Plan—the catch-up limit for employees aged 50 and over has increased to $8,500, up from $8,000 in 2026. Consequently, workers aged 50 and over with these plans can contribute a maximum total of $34,000 each year starting in 2027.

The limit for Individual Retirement Account (IRA) accounts will remain at $7,500. (iStock Getty Images / Getty Images)

Looking at older workers specifically, those aged 60 to 63 years old under these plans can contribute up to $11,750, reflecting a specialized provision established by the SECURE 2.0 Act of 2022. Finally, the IRS announced that the income ranges for determining eligibility to make deductible contributions to traditional IRAs, to contribute to Roth IRAs, and to claim the Saver’s Credit have all increased for 2027, broadening financial planning opportunities for middle- and lower-income households.

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