IRS lifts 401(k) employee deferral cap to $25,500 for 2027

The Internal Revenue Service announced on Thursday that the employee deferral limit for 401(k), 403(b) and most 457 plans will increase to $25,500 in 2027, up from $24,500 in 2026, according to CNBC.

What are the new 401(k) contribution limits for 2027?

The 2027 deferral ceiling is $25,500, with a catch‑up contribution of $8,500 for participants aged 50 and older and an additional $11,750 option for those aged 60 to 63, a $500 rise from 2026, CNBC reported.

How do the changes affect IRA contribution limits?

The contribution limit for traditional and Roth IRAs stays at $7,500 for 2027, unchanged from the prior year, and the catch‑up amount for savers 50 and older remains $1,100, CNBC noted.

What guidance do experts give for maximizing the new limits?

Financial planner Sean Michael Pearson of Ameriprise urged workers to first secure their full employer match before worrying about limits, and suggested incrementally raising contributions—such as a 1% annual increase—to build wealth over time, CNBC quoted. Fidelity data showed about 19% of employees in 2026 were not deferring enough to capture their companies’ full match, while Vanguard’s 2025 report indicated only 14% of participants maxed out their 401(k)s, CNBC added.