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The IRS has announced new retirement account contribution limits for 2027.
In Thursday’s announcement, the agency increased the deferral limit for employees’ 401(k)s from $24,500 in 2026 to $25,500 next year. The change applies to 401(k), 403(b), and most 457 plans, along with federal thrift savings plans.
The IRS also announced 2027 catch-up contribution limits for savers age 50 and older, new individual retirement account savings limits, and higher income thresholds for Roth IRA contributions.
Starting in 2027, the 401(k) catch-up contribution limit for savers age 50 and older will increase from $8,000 in 2026 to $8,500. However, investors between the ages of 60 and 63 could instead save an additional $11,750 based on changes enacted by Secure 2.0. This number is $500 higher than in 2026.
Both amounts are in addition to the 2027 deferral limit of $25,500.
The IRS announced that the IRA contribution limit for 2027 will be $7,500, unchanged from 2026. IRA catch-up contributions for investors age 50 and older will remain the same as in 2026, at $1,100.
The announcement comes a week after the agency announced dozens of other 2027 inflation adjustments, including provisions affecting federal income tax ranges, higher capital gains ranges, estate and gift tax exemptions, family members and more.
Start by getting your 401(k) matched with your employer.
According to Vanguard’s 2026 How America Saves report, only 14% of participants maxed out their 401(k) in 2025. This report is based on data from more than 1,300 eligible plans and nearly 5 million participants. The average savings rate, including employer deposits, was estimated at 12.1%, according to the same report.
“Make sure you fully understand your employer match before you worry about contribution limits,” says Sean Michael Pearson, a certified financial planner with Ameriprise Financial Services in Conshohocken, Pennsylvania.
Vanguard suggests saving 12 to 15 percent of your annual salary, including employer contributions, depending on your income. But only a quarter of 401(k) participants deferred more than 10% of their earnings in 2025, according to the Vanguard report.
If you plan to max out your 401(k) for 2027, you should change your savings rate in December so it’s active by your first January paycheck, experts say.It may take one or two pay periods for the update to take effect.
Increase your 401(k) savings rate every year
Pearson says the “most important habit” is to consistently increase your 401(k) savings rate over time.
For example, increasing your 401(k) contributions by 1% each year “may make little difference in pay, but the long-term impact can be significant,” he says.
In 2025, about 27% of 401(k) plans automatically increased employee deferrals over time, known as “auto-escalation,” according to the American Council of Plan Sponsors’ annual survey of 401(k) plans. The nonprofit trade group’s study included 753 plans.
A study by the American Council of Plan Sponsors found that the majority (69%) of plans with automatic escalation saw deferrals increase by 1% per year.
