The IRS has announced higher 2027 contribution limits for 401(k).
The annual contribution limit for employees who participate in a 401(k) plan rises to $25,500 for 2027, up from $24,500 this year, the IRS said in a Nov. 12 statement.
The new limit also applies to individuals participating in 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan.
The catch-up contribution limit, typically available to workers aged 50 and older in these plans, has risen from $8,000 to $8,500. Catch-up contributions let them contribute extra to their retirement accounts, beyond the standard limits. The $8,500 in catch-up contributions is in addition to the $25,500 annual contribution limit.
These individuals can therefore generally contribute up to $34,000 to the plans in 2027, compared to the $25,500 limit for those below 50.
People aged 60 to 63 can also make higher catch-up contributions. For 2027, the limit is $11,750, up from $11,250 in 2026. Starting at age 64, individuals are not eligible for this higher catch-up limit.
Americans ages 60–63 can generally contribute up to $37,250 next year to a 401(k), 403(b), governmental 457 plans, and the Thrift Savings Plan.
For IRAs, the annual contribution limit for 2027 remains unchanged at $7,500. The IRA catch‑up contribution limit for people aged 50 and above remains unchanged at $1,100.
“Along with the Working Families Tax Cuts, this increase in the pension limitations will help American families keep more of their hard-earned income,” IRS Chief Executive Officer Frank Bisignano said in the statement.
“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.”
The Working Families Tax Cuts, a set of provisions within the One Big Beautiful Bill Act, had introduced several tax benefits for Americans, including enabling employees to deduct tips and some overtime payments up to certain limits when calculating their taxes and allowing seniors aged 65 and above to claim $6,000 in deductions over and above the standard deduction.
SIMPLE Account Contributions, Updated Error Correction
The IRS also updated contribution limits for Savings Incentive Match Plan for Employees (SIMPLE) retirement accounts for 2027, according to its latest statement.
Individuals can generally contribute up to $17,500 to their SIMPLE plans next year, up from $17,000 this year, the IRS said. Certain SIMPLE accounts may have higher contribution limits; for 2027, the limit is $19,100, up from $18,100.
Catch-up contributions for most SIMPLE accounts, generally applicable to employees aged 50 and over, remain unchanged at $4,000. For 60- to 63-year-olds, the limit remains $5,250.
The IRS also unveiled error-correction updates for SIMPLE, 403(b), and IRA accounts last month, according to an Oct. 22 statement from the agency.
For SIMPLE and 403(b) plans, plan sponsors now have access to an updated Employee Plans Compliance Resolution System that lets them fix mistakes, such as errors in plan documents.
For IRAs, a new IRA Compliance Resolution System will allow IRA custodians and owners to request corrections for errors made by service providers, such as financial planners or certified public accountants. This system will be effective from May 1, 2027.
“Hard-working Americans will benefit from these procedures because they simplify and speed up how errors with certain retirement plans and IRAs can get corrected when there is a simple problem,” Bisignano said in the statement.
“These procedures are part of our effort to make complying with the nation’s tax laws easier and less burdensome for taxpayers.”
