IRS ups 401(k) limits to $25,500 for next year
- Key Insight: Uncover how the IRS’s newly released 2027 contribution limits affect different retirement accounts.
- Expert Quote: “this increase in the pension limitations will help American families keep more of their hard-earned income,” — Frank Bisignano, IRS CEO
The Internal Revenue Service has increased the amount individuals can contribute to their 401(k) plans in 2027 to $25,500, up from $24,500 for 2026, but the limit for individual retirement accounts has stayed at $7,500.
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The IRS also issued technical guidance Thursday providing all of the cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2027 in
“Along with the Working Families Tax Cuts, this increase in the pension limitations will help American families keep more of their hard-earned income,” said IRS CEO Frank Bisignano in a statement. “With the new adjustment in place now, the IRS is giving taxpayers and employers the information needed to make retirement planning decisions for the year ahead.”
The annual contribution limit for employees who participate in 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan is increased to $25,500, up from $24,500 for 2026.
The limit on annual contributions to an Individual Retirement Account remains $7,500. The IRA catch‑up contribution limit for individuals aged 50 and over, which was amended under the SECURE 2.0 Act of 2022 (SECURE 2.0) to include an annual cost‑of‑living adjustment, remains $1,100.
The catch-up contribution limit that generally applies for employees aged 50 and over who participate in most 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan is increased to $8,500, up from $8,000 for 2026. Therefore, participants in most 401(k), 403(b), governmental 457 plans and the federal government’s Thrift Savings Plan who are 50 and older generally can contribute up to $34,000 each year, starting in 2027. Under a change made in SECURE 2.0, a higher catch-up contribution limit applies for employees aged 60, 61, 62 and 63 who participate in these plans. For 2027, this higher catch-up contribution limit is $11,750 instead of the $8,500 noted above.
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 all increased for 2027.
Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If, during the year, either the taxpayer or the taxpayer’s spouse was covered by a retirement plan at work, the deduction may be reduced or phased out until it is eliminated, depending on filing status and income. If neither the taxpayer nor the spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply. The phase‑out ranges for 2027 are:
- For single taxpayers covered by a workplace retirement plan, the phase-out range is increased to between $83,000 and $93,000, up from between $81,000 and $91,000 for 2026.
- For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is increased to between $133,000 and $153,000, up from between $129,000 and $149,000 for 2026.
- For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range is increased to between $250,000 and $260,000, up from between $242,000 and $252,000 for 2026.
- For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
The notice also includes limitations for 2027 for Roth IRAs, the Saver’s Credit as well as SIMPLE retirement accounts.
- The income phase-out range for taxpayers making contributions to a Roth IRA has increased to between $158,000 and $173,000 for singles and heads of household, up from between $153,000 and $168,000 for 2026. For married couples filing jointly, the income phase-out range is increased to between $250,000 and $260,000, up from between $242,000 and $252,000 for 2026. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
- The income limit for the Saver’s Credit (for contributions made to ABLE accounts after December 31, 2026) for low- and moderate-income workers is $83,000 for married couples filing jointly, up from $80,500 for 2026; $62,250 for heads of household, up from $60,375 for 2026; and $41,500 for singles and married individuals filing separately, up from $40,250 for 2026.
- The amount individuals can typically contribute to their SIMPLE retirement accounts is increased to $17,500, up from $17,000 for 2026. Under a change made in SECURE 2.0, individuals can contribute a higher amount to certain applicable SIMPLE retirement accounts. For 2027, this higher amount is increased to $19,100, up from $18,100 for 2026.
- The catch-up contribution limit that usually applies for employees aged 50 and over who participate in most SIMPLE plans remains $4,000. Under a change made in SECURE 2.0, the different catch-up limit that applies for employees aged 50 and over who participate in certain applicable SIMPLE plans remains $3,850. Under another change made in SECURE 2.0, the higher catch-up contribution limit that applies for employees aged 60, 61, 62 and 63 who participate in SIMPLE plans remains $5,250.
Details on all of the retirement-related cost-of-living adjustments for 2027 can be found in
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