IRS raises 401(k) limit to $25,500 for 2027, IRA stays at $7,500

The IRS raised the 401(k) contribution limit to $25,500 for 2027 from $24,500 and left the IRA limit at $7,500, according to Notice 2026-66 published Nov. 12.

Savers 50 and older can defer $8,500 in catch-up contributions next year, up from $8,000, bringing the combined limit to $34,000 in most 401(k), 403(b), governmental 457 and Thrift Savings Plan accounts. Participants who turn 60, 61, 62 or 63 in 2027 get a larger catch-up of $11,750, the higher limit SECURE 2.0 created for that age bracket. Workplace limits move with third-quarter inflation, which was 3.7% this year, rounded down to the nearest $500. The $1,100 IRA catch-up held steady, and SECURE 2.0 amended it to include an annual cost-of-living adjustment.

For a 2027 projection, a client whose income sits inside one of the new bands can deduct or contribute where the 2026 numbers would have disqualified them, so last year's conversion spreadsheet produces the wrong answer. For a single filer covered by a workplace plan, the traditional IRA deduction now phases out between $83,000 and $93,000, up from $81,000 to $91,000. Married couples filing jointly move to $133,000 and $153,000 from $129,000 and $149,000. A saver with no workplace plan who is married to someone covered by one moves to $250,000 and $260,000 from $242,000 and $252,000. Roth IRA eligibility for singles and heads of household rises to between $158,000 and $173,000.

The Saver's Match, the SECURE 2.0 incentive that generally replaces the Saver's Credit with a federal matching contribution of up to $1,000, is scheduled to take effect for tax years beginning after Dec. 31, 2026, according to PLANADVISER's report. The tax-deferred limit for pension-linked emergency savings accounts, an option in some defined contribution plans, rises to $2,700 from $2,600. For a married filer submitting a separate return, the deduction phase-out is not subject to an annual cost-of-living adjustment and stays between $0 and $10,000.

The pension limits arrive a week after the IRS published 2027 inflation adjustments for almost 70 other tax provisions in Revenue Procedure 2026-35, as Private Wealth Daily previously reported. Notice 2026-66 also carries 2027 limits for Roth IRAs, SIMPLE retirement accounts and the Saver's Credit.