The Internal Revenue Service released its annual cost‑of‑living adjustments for retirement plans on Thursday, offering a welcome boost for workers planning to save more in 2027. The agency raised the annual contribution limit for 401(k) plans, 403(b) plans, most governmental 457 plans, and the federal Thrift Savings Plan from $24,500 to $25,500. This $1,000 increase gives earners an extra opportunity to build retirement security before they reach retirement age.
Catch‑up contributions for older workers
For employees age 50 and older, the IRS also lifted the catch‑up contribution limit for most 401(k), 403(b) and governmental 457 plans from $8,000 to $8,500. As a result, eligible workers in this age group can now contribute up to $34,000 to those plans in 2027.
Under the SECURE 2.0 Act, workers ages 60 through 63 receive an even larger catch‑up increase. The limit for that cohort rises to $11,750, allowing a maximum contribution of $37,250 for the year.
IRA limits stay the same
In contrast, the annual contribution caps for traditional and Roth individual retirement accounts (IRAs) remain unchanged at $7,500 for 2027, with the catch‑up contribution for those 50 and older staying at $1,100. While the contribution ceiling does not move, the IRS did adjust income phase‑out ranges that affect who can deduct traditional IRA contributions, who can contribute to a Roth IRA, and who qualifies for the Saver’s Credit.
Roth IRA income limits rise
For single filers and heads of household, the Roth IRA income phase‑out range expands to between $158,000 and $173,000, up from $153,000–$168,000 in 2026. Married couples filing jointly see the range increase to $250,000–$260,000, compared with $242,000–$252,000 last year.
SIMPLE plan contributions also increase
The IRS raised the general annual contribution limit for Savings Incentive Match Plan for Employees (SIMPLE) retirement accounts from $17,000 to $17,500 for 2027. Certain eligible SIMPLE plans may contribute up to $19,100.
What this means for families and workers
These adjustments reflect the Treasury’s effort to keep retirement savings limits in step with inflation and wage growth, helping families protect their financial future. Workers should review their personal circumstances—age, income level, and the type of retirement account they hold—to determine how the new limits affect their saving strategy.
Tax professionals and financial advisors are encouraged to guide clients through the updated rules, especially the higher catch‑up amounts for those nearing retirement age. The full list of revised limits is detailed in IRS Notice 2026‑66, available on the agency’s website.
Key takeaways
- 401(k) limit rises to $25,500 for 2027.
- Catch‑up limit for workers 50+ rises to $8,500; for ages 60‑63, it jumps to $11,750.
- IRA contribution caps stay at $7,500, with $1,100 catch‑up.
- Roth IRA income phase‑out ranges increase for both single filers and married couples.
- SIMPLE plan limit climbs to $17,500.
Individuals planning their retirement contributions for next year should consider these changes early, as the new limits can significantly affect how much they can set aside tax‑advantaged savings.
Original reporting: 2news.com — read the source article.
