401(k) Contribution Limits 2027, IRS Increases Savings Limit

The IRS announced new retirement account contribution limits for 2027.

In its statement Thursday, the agency increased the employee 401(k) deferral limit to $25,500 next year, up from $24,500 in 2026. The change applies to 401(k), 403(b) and most 457 plans, as well as the Federal Thrift Savings Plan.

The IRS also unveiled 2027 catch-up contribution limits for savers age 50 and older, new savings limits for individual retirement accounts and higher income thresholds for Roth IRA contributions.

Starting in 2027, the 401(k) catch-up contribution limit will increase to $8,500 for savers 50 and older, up from $8,000 in 2026. But investors ages 60 to 63 can instead save an additional $11,750, based on changes enacted through Secure 2.0. This figure is up $500 from 2026.

Both amounts are in addition to the $25,500 carryover limit for 2027.

The IRA contribution limit for 2027 is $7,500, unchanged from 2026, the IRS announced. IRA catch-up contributions for investors aged 50 and older will be $1,100, the same as in 2026.

The announcement comes a week after the agency released dozens of other inflation adjustments for 2027, including federal income tax brackets, higher capital gains brackets, estate and gift tax exemptions, and provisions affecting families, among others.

In 2025, just 14% of participants maxed out their 401(k), according to Vanguard’s 2026 How America Saves report, based on data from more than 1,300 qualified plans and nearly 5 million participants. The average combined savings rate, including employer deposits, was estimated at 12.1%, according to the same report.

“Before worrying about contribution limits, make sure you capture your entire employer contribution,” said Sean Michael Pearson, a certified financial planner at Ameriprise Financial Services in Conshohocken, Pennsylvania.

During the second quarter of 2026, about 19% of employees did not defer 401(k) plans enough to receive their company’s full matching contribution, according to a Fidelity analysis of 27,300 company plans and nearly 26 million participants.

Vanguard suggests saving 12% to 15% of your salary per year, including employer contributions, depending on your income. But only a quarter of 401(k) plan participants deferred more than 10% of their income to 2025, according to the Vanguard report.

If you’re planning to max out your 401(k) for 2027, you should change your savings rate in December so that it’s active as soon as your first paycheck in January, experts say. The update may take one or two pay periods to take effect.

According to Pearson, “the most important habit” is to consistently increase your 401(k) savings rate over time.

For example, if you increase 401(k) contributions by 1% each year, “you may barely notice the difference in your salary, but the long-term impact can be substantial,” he said.

By 2025, about 27% of 401(k) plans have automatically increased employee deferrals over time, known as “automatic escalation,” according to the Plan Sponsor Council of America’s annual survey of 401(k)s. The nonprofit trade organization’s survey included 753 plans.

The vast majority of plans with auto-escalation, 69%, increased deferrals by 1% per year, the Plan Sponsor Council of America found.