Key Highlights

  • The 401(k) limit rises $1,000 to $25,500 in 2027, and the same limit applies to 403(b), 457 and Thrift Savings Plan accounts.
  • Workers aged 50 and over can save up to $34,000, and workers aged 60 to 63 can save up to $37,250.
  • The IRA limit stays at $7,500, while income limits for Roth IRAs and IRA deductions move higher.
  • A new Saver's Match replaces the Saver's Credit for plan and IRA savings starting in 2027.

Workers can put $1,000 more into their 401(k) accounts in 2027. The Internal Revenue Service (IRS) raised the limit to $25,500 from $24,500 in Notice 2026-66, released on November 12, 2026, while the limit for individual retirement accounts (IRAs), which workers open on their own, stayed at $7,500. That split shapes the rest of the changes: larger catch-up amounts for older savers, higher income lines for IRA tax breaks and a new matching program for lower-income savers.

The 401(k) Limit Climbs to $25,500

The 401(k) limit is the most a worker can put into the account from their own pay in a year, and an employer's match does not count toward it. The same $25,500 applies to 403(b) plans at schools and nonprofits, governmental 457 plans and the federal Thrift Savings Plan. A plan can offer pre-tax contributions, which lower this year's taxable income, or Roth contributions, which are taxed now with qualified withdrawals tax-free in retirement.

What does the full limit cost? Spread across 26 biweekly paychecks, it takes $980.77 from each one, which is $38.46 more than the 2026 limit required. The limit is a ceiling, not a goal. A worker earning $85,000 who saves 10% of pay sets aside $8,500, one-third of the limit, and reaches $25,500 only at 30% of pay. A worker earning $200,000 reaches it at 12.75%, because a flat dollar limit takes a smaller share of a larger income.

SIMPLE plans, retirement plans that small employers offer, take a smaller step. The employee limit rises to $17,500 from $17,000, and to $19,100 from $18,100 for certain eligible employers. SIMPLE catch-up limits stay where they were.

Older Savers Get More Room

Workers aged 50 and over get more room on top of the higher limit. A catch-up contribution is extra money allowed above the regular limit in plans that offer one. The 2027 catch-up is $8,500, up from $8,000, which lifts the total limit to $34,000. Workers who turn 60, 61, 62 or 63 during 2027 get a larger catch-up of $11,750, up from $11,250, for a total of $37,250. The larger amount ends at 63, so workers aged 64 and over return to $8,500.

Higher earners meet one more rule. Workers whose wages from their plan's employer topped a set threshold in the prior year must make catch-up contributions as Roth contributions, taxed now instead of at withdrawal. For 2027 catch-ups, the test compares 2026 wages with $155,000, up from $150,000. Workers below that line keep the choice between pre-tax and Roth where the plan offers both. SIMPLE and SEP plans, which small employers use, are exempt.

The IRA Limit Holds, So the Gap Widens

The IRA takes a different path. The yearly limit stays at $7,500, and workers aged 50 and over keep the same $1,100 catch-up, for a total of $8,600. With the 401(k) limit up and the IRA limit flat, workplace plans now offer $18,000 more room than IRAs, up from $17,000 in 2026.

Income Lines Move Higher for IRA Tax Breaks

Whether an IRA saver gets a tax break depends on income, measured as adjusted gross income, the income figure on a tax return. A Roth IRA is funded with after-tax money, and the amount a worker can add shrinks as income rises until it reaches zero at the top of a range. For 2027, that range runs from $158,000 to $173,000 for single filers, up from $153,000 to $168,000, and from $250,000 to $260,000 for married couples filing jointly, up from $242,000 to $252,000. Heads of household, who are unmarried and pay more than half the cost of a home for a qualifying person, use the single-filer range.

Traditional IRA contributions can lower taxable income, but the deduction fades for workers covered by a workplace plan. Single filers with a plan lose it between $83,000 and $93,000, up from $81,000 to $91,000. For married couples filing jointly, the range is $133,000 to $153,000 when the contributing spouse has a plan, up from $129,000 to $149,000. When the contributor has no plan but a spouse does, the range is $250,000 to $260,000, up from $242,000 to $252,000. Workers and spouses with no workplace plan face no phase-out.

Two examples show the effect. A single filer with $155,000 of income had a reduced Roth limit under the 2026 rules, but the same income sits below the 2027 range and earns the full $7,500. A single filer with $82,000 of income and a workplace plan got a partial deduction in 2026 and gets the full deduction in 2027.

A New Saver's Match Replaces the Saver's Credit

The biggest structural change reaches lower-income savers. The Saver's Credit gives lower- and moderate-income workers a tax credit for retirement saving. Starting in 2027, a new Saver's Match replaces it for savings in workplace plans and IRAs. The IRS says the match covers up to half of a saver's contributions, up to $1,000 a year per person, and goes into the saver's plan or IRA. The match shrinks as income rises.

The credit survives for contributions to ABLE accounts, special savings accounts for people with disabilities. Its 2027 income limits are $83,000 for married couples filing jointly, $62,250 for heads of household and $41,500 for single filers and married individuals filing separately.

Steps to Take Before the First 2027 Paycheck

Higher limits do not raise anyone's contributions on their own, so three checks matter before January. First, check how the contribution is set. A fixed dollar amount does not rise by itself, so a worker who contributes $24,500 a year leaves $1,000 of 2027 room unused unless the amount changes.

Second, check how the employer match works. Plans differ on when they calculate it. If a plan calculates the match with every paycheck, a worker who reaches the limit early stops receiving match money for the rest of the year unless the plan adds a year-end true-up, a payment that makes up the missed match. The plan documents state the method.

Third, check the Roth catch-up rule. Workers whose 2026 wages from one employer are near $155,000 need to confirm how that plan handles Roth catch-up contributions.

The 2027 Picture: More Room at Work, a Flat IRA

Workplace plans gain room in 2027 and the IRA does not. Every worker with a 401(k) gains $1,000 of room, workers aged 50 and over gain $1,500, and the gap between the 401(k) and IRA limits widens to $18,000. The rules beyond the dollar amounts changed too: income lines for IRA tax breaks move up by $2,000 to $8,000 at the top end, the Roth catch-up wage line rises to $155,000, and the Saver's Match takes over from the Saver's Credit for plan and IRA savings. The limits are ceilings, and each worker's contribution settings decide how much of the new room gets used.