IRS raises retirement contribution limits for U.S. workplace plans in 2027

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IRS raises retirement limits 2027

Highlights

IRS raises 2027 workplace retirement plan deferral cap to $25,500 from $24,500, with 401(k) catch-up limits up to $8,500 for those over 50.
Secure 2.0 enables workers aged 60-63 to make extra 401(k) catch-up contributions of $11,750 in 2027, $500 higher than in 2026.
IRA contribution limits remain at $7,500 in 2027, with catch-up for those 50+ unchanged at $1,100, as other inflation adjustments take effect.

New savings caps for 2027

As reported by CNBC, the Internal Revenue Service says employees can defer up to $25,500 into workplace retirement plans in 2027, up from $24,500 in 2026. The 401(k) catch-up contribution limit for savers aged 50 and older rises to $8,500 from $8,000, and workers aged 60 to 63 can contribute an extra $11,750 under changes enacted through Secure 2.0, up $500 from 2026.

Both catch-up amounts come on top of the new $25,500 standard deferral cap. The IRA contribution limit stays at $7,500 in 2027, unchanged from 2026, while IRA catch-up contributions for investors aged 50 and older remain $1,100.

The announcement comes one week after the agency released other 2027 inflation adjustments, including federal income tax brackets, capital gains thresholds, estate and gift tax exemptions and provisions affecting families.

Implications for retirement savers

Financial advisers say the higher caps matter most for workers who are already saving steadily and want to increase contributions at the start of the year. Sean Michael Pearson, a certified financial planner with Ameriprise Financial Services in Conshohocken, Pennsylvania, says savers should first make sure they capture their full employer match before focusing on the maximum annual limit.

During the second quarter of 2026, about 19% of employees were not contributing enough to their 401(k) plans to receive their full company match, according to a Fidelity analysis covering 27,300 corporate plans and nearly 26 million participants. Vanguard suggests saving 12% to 15% of annual pay, including employer contributions, depending on income.

Experts also say workers planning to max out 401(k) contributions in 2027 should adjust their savings rate in December so the change takes effect with the first January paycheck, since updates can take one or two pay periods to be implemented. Pearson says the most important habit is steadily increasing the 401(k) savings rate over time, and industry data show many employers are reinforcing that approach through auto-escalation features that lift employee deferrals annually.

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