Key Takeaways
- • The IRS raised the 2027 annual contribution limit for 401(k), 403(b), most 457 plans and the Thrift Savings Plan to $25,500, up from $24,500 in 2026, according to the announcement on November 12.
- • Catch-up contributions for workers aged 50 and older rose to $8,500 from $8,000, bringing the total allowable DC plan contribution for those savers to $34,000 in 2027.
- • The IRA contribution limit holds at $7,500, and the IRA catch-up remains at $1,100, though the catch-up is now subject to annual cost-of-living adjustments under SECURE 2.0.
- • Income phase-out ranges for traditional and Roth IRAs widened upward for 2027, with single filers in workplace plans seeing traditional IRA phase-outs of $83,000 to $93,000.
- • The SIMPLE retirement account limit rose to $17,500 from $17,000, and the Saver's Match takes effect for taxable years beginning after December 31, 2026.
Summary
The Internal Revenue Service announced on November 12 the annual contribution limits for qualified defined contribution plans and individual retirement accounts for the 2027 tax year. The limit for workers participating in 401(k), 403(b) and most 457 plans, as well as the federal Thrift Savings Plan, increases to $25,500 from $24,500 in 2026. According to the IRS framework, DC plan limits adjust in step with the inflation rate for the third quarter of each year, which this year was 3.7%, rounded down to the nearest $500 increment.
Catch-up contributions for DC plan participants aged 50 and older rise to $8,500 from $8,000, producing a total allowable annual contribution of $34,000 for qualifying plans in 2027. A separate catch-up limit of $11,750 applies to individuals who turn 60, 61, 62 or 63 in 2027. The IRA contribution limit remains unchanged at $7,500, and the IRA catch-up limit holds at $1,100. The IRS noted that SECURE 2.0 Act of 2022 amended the catch-up provision to include an annual cost-of-living adjustment.
Income eligibility ranges adjust upward for both traditional and Roth IRAs. For single taxpayers covered by a workplace plan, the traditional IRA phase-out range rises to $83,000 to $93,000 from $81,000 to $91,000. For married couples covered by a workplace plan, it rises to $133,000 to $153,000 from $129,000 to $149,000. Roth IRA phase-outs for singles and heads of household increase to $158,000 to $173,000 from $153,000 to $168,000, and for married couples filing jointly to $250,000 to $260,000 from $242,000 to $252,000.
Other limits also changed. SIMPLE retirement account contributions increase to $17,500 from $17,000, and the higher amount for certain applicable SIMPLE plans rises to $19,100 from $18,100. The highly compensated employee threshold increases to $170,000 from $160,000. The tax-deferred limit for pension-linked emergency savings accounts rises to $2,700 from $2,600. The Saver's Match, a SECURE 2.0 incentive that generally replaces the Saver's Credit and provides up to $1,000 in federal matching contributions for eligible low- and moderate-income savers, is scheduled to take effect for taxable years beginning after December 31, 2026.
The IRS also released health and welfare inflation adjustments for 2027. The flexible spending arrangement salary reduction limit rises to $3,500 from $3,400, and the carryover maximum increases to $700. The health savings account contribution limit, announced in June, rises to $4,500 from $4,400 for 2026.
Catch-up contributions for DC plan participants aged 50 and older rise to $8,500 from $8,000, producing a total allowable annual contribution of $34,000 for qualifying plans in 2027. A separate catch-up limit of $11,750 applies to individuals who turn 60, 61, 62 or 63 in 2027. The IRA contribution limit remains unchanged at $7,500, and the IRA catch-up limit holds at $1,100. The IRS noted that SECURE 2.0 Act of 2022 amended the catch-up provision to include an annual cost-of-living adjustment.
Income eligibility ranges adjust upward for both traditional and Roth IRAs. For single taxpayers covered by a workplace plan, the traditional IRA phase-out range rises to $83,000 to $93,000 from $81,000 to $91,000. For married couples covered by a workplace plan, it rises to $133,000 to $153,000 from $129,000 to $149,000. Roth IRA phase-outs for singles and heads of household increase to $158,000 to $173,000 from $153,000 to $168,000, and for married couples filing jointly to $250,000 to $260,000 from $242,000 to $252,000.
Other limits also changed. SIMPLE retirement account contributions increase to $17,500 from $17,000, and the higher amount for certain applicable SIMPLE plans rises to $19,100 from $18,100. The highly compensated employee threshold increases to $170,000 from $160,000. The tax-deferred limit for pension-linked emergency savings accounts rises to $2,700 from $2,600. The Saver's Match, a SECURE 2.0 incentive that generally replaces the Saver's Credit and provides up to $1,000 in federal matching contributions for eligible low- and moderate-income savers, is scheduled to take effect for taxable years beginning after December 31, 2026.
The IRS also released health and welfare inflation adjustments for 2027. The flexible spending arrangement salary reduction limit rises to $3,500 from $3,400, and the carryover maximum increases to $700. The health savings account contribution limit, announced in June, rises to $4,500 from $4,400 for 2026.
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