The Internal Revenue Service announced today that the amount individuals can contribute to their 401(k) plans in 2027 has increased to $25,500, up from $24,500 for 2026.
The IRS today also issued technical guidance regarding all cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2027 in Notice 2026-66 posted today on IRS.gov.
“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 Chief Executive Officer Frank J. Bisignano. “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.”
Highlights of changes for 2027
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.
Other phase-out ranges and limitations
The notice also provides limitations for 2027 for Roth IRAs, the Saver’s Credit and SIMPLE retirement accounts.
- The income phase-out range for taxpayers making contributions to a Roth IRA is 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 generally contribute to their SIMPLE retirement accounts is increased to $17,500, up from $17,000 for 2026. Pursuant to 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 generally 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.
For tax year 2027, the standard employee contribution limit for 401(k), 403(b), governmental 457 plans, and the federal Thrift Savings Plan (TSP) rises to $25,500 (up $1,000 from $24,500 in 2026). If you are age 50 or older, the standard catch-up contribution limit increases to $8,500 (up from $8,000), bringing your total annual employee contribution limit to $34,000. (Note: Including employer matching and profit-sharing, the overall Section 415(c) total contribution cap rises from $72,000 to $75,000 before catch-up contributions.)
Under SECURE 2.0 rules, employees who turn 60, 61, 62, or 63 during 2027 qualify for a higher “super catch-up” limit in place of the standard $8,500 catch-up. For 2027, this enhanced catch-up increases from $11,250 to $11,750, allowing eligible participants to contribute up to $37,250 ($25,500 + $11,750) in employee deferrals—provided their employer’s plan adopts the provision. Once you turn 64, your catch-up reverts to the standard age-50+ limit.
No. The annual contribution limit for Traditional and Roth IRAs remains $7,500 for 2027, and the catch-up contribution limit for individuals age 50 and older stays at $1,100 (for a maximum of $8,600). However, the income phase-out ranges for Roth IRA eligibility and Traditional IRA tax deductibility did increase, allowing higher earners to qualify.
Your ability to contribute directly to a Roth IRA depends on your Modified Adjusted Gross Income (MAGI) and tax filing status:
Single & Head of Household: Full contributions are allowed with a MAGI under $158,000, phasing out completely at $173,000 (up from $153,000–$168,000 in 2026).
Married Filing Jointly: Full contributions are allowed under $250,000, phasing out completely at $260,000 (up from $242,000–$252,000 in 2026).
Married Filing Separately: Not indexed for inflation; the phase-out remains $0 to $10,000.
SIMPLE Plans: The standard employee contribution limit increases by $500 to $17,500 (up from $17,000). For certain eligible small employers under SECURE 2.0, the higher SIMPLE contribution limit rises by $1,000 to $19,100 (up from $18,100). SIMPLE catch-up limits remain unchanged at $4,000 ($3,850 for higher-limit plans) for ages 50+ and $5,250 for ages 60–63.
Saver’s Credit (for ABLE account contributions after Dec. 31, 2026): The adjusted gross income caps increase to $83,000 for married couples filing jointly (up from $80,500), $62,250 for heads of household (up from $60,375), and $41,500 for single filers and married individuals filing separately (up from $40,250). (Note: Beginning in 2027, the traditional Saver’s Credit for IRA and 401(k) contributions transitions to the new federal Saver’s Match program, while the Saver’s Credit remains available for ABLE accounts.)
Suresh Saini is the Founder and Lead Financial Researcher at Tax Assistant. He holds a Master of Commerce (M.Com) degree with a specialized focus on Advanced Accountancy, providing him with a robust academic and analytical foundation in complex accounting principles, credit systems, and personal finance structures.
Driven by a passion to democratize financial literacy, Suresh has spent years analyzing and decoding shifting fiscal guidelines. At Tax Assistant, he manages the platform’s core editorial direction, transforming dense government updates and complex banking parameters into structured, clear, and actionable guides for both individual taxpayers and small businesses across North America.
Before launching taxassistant.org, Suresh conducted deep financial and market dynamics research, focusing on asset management, personal wealth optimization, and strategic tax planning. His dedication to data integrity ensures that every piece of news, breakdown, or analysis published under his leadership is rigorously fact-checked by certified tax professionals and aligned perfectly with contemporary regulatory frameworks.
