What Are the 2027 401(k) and IRA Limits? What to Change Before Your First 2027 Paycheck
The 2027 401(k) limit rises to $25,500 and the IRA limit stays at $7,500. The new catch-ups, Roth IRA income limits and what to update before January payroll.
The IRS announced on November 12 that the 401(k) limit rises to $25,500 for 2027, up $1,000 from this year. The IRA limit stays at $7,500. If you're 50 or older, you can put up to $34,000 into your 401(k) next year, and if you turn 60 through 63 in 2027, up to $37,250 (IRS).
For most people, the change that matters is the one you make in payroll. 401(k) contributions only come out of your paycheck, so if you want to use the higher limit, update your election before January. Higher earners who are 50 or older also need to check how their catch-up contributions will be taxed.
As a Houston CPA and hourly financial planner, I walk through these numbers with clients every November. Here's what changed and what to do about it.
This is general education, not advice for your specific situation.
What are the 2027 retirement contribution limits?
All 2027 figures below come from the IRS announcement and Notice 2026-66, which lists every retirement-plan adjustment for the year.
| Limit | 2026 | 2027 |
|---|---|---|
| Employee contributions to a 401(k), 403(b), governmental 457 plan or the Thrift Savings Plan | $24,500 | $25,500 |
| Catch-up, age 50 and older | $8,000 | $8,500 |
| Catch-up, age 60 through 63 (instead of the age-50 amount) | $11,250 | $11,750 |
| Total contributions from you and your employer to a workplace plan, before catch-ups | $72,000 | $75,000 |
| Maximum pay a plan can count when figuring contributions | $360,000 | $375,000 |
| IRA contribution (traditional and Roth combined) | $7,500 | $7,500 |
| IRA catch-up, age 50 and older | $1,100 | $1,100 |
| SIMPLE IRA or SIMPLE 401(k) deferral | $17,000 | $17,500 |
| Roth catch-up threshold (applied to the prior year's wages) | $150,000 | $155,000 |
| Qualified charitable distributions from an IRA | $111,000 | $114,000 |
HSA limits are set separately. For 2027, they rise to $4,500 for self-only coverage and $9,000 for family coverage (Rev. Proc. 2026-24). If you're deciding whether an HSA fits, see our HSA guide.
Who can contribute to a Roth IRA in 2027?
The IRA limit didn't change, but the income ranges did. That matters if your income is close to one of these cutoffs.
| 2027 income phase-out (modified AGI) | Single or head of household | Married filing jointly |
|---|---|---|
| Roth IRA contribution | $158,000 to $173,000 | $250,000 to $260,000 |
| Traditional IRA deduction, if you're covered by a workplace plan | $83,000 to $93,000 | $133,000 to $153,000 |
| Traditional IRA deduction, if only your spouse is covered | Not applicable | $250,000 to $260,000 |
Source: IRS news release IR-2026-136. If you're married filing separately, these ranges stay at $0 to $10,000.
Below the bottom of a range, you get the full contribution or deduction. Above the top, you get none. In between, it's reduced. If neither you nor your spouse is covered by a plan at work, the traditional IRA deduction has no income limit.
Do my catch-up contributions have to be Roth in 2027?
If you're 50 or older and your 2026 wages from the employer that sponsors your plan are above $155,000, generally yes. Your 2027 catch-up contributions to that plan have to go in as Roth (after-tax) contributions (Notice 2026-66). Your regular contributions, up to $25,500, can still be pre-tax.
2027 is also the year the final regulations on this rule generally take effect. For 2026, plans can apply it under a reasonable, good-faith reading of the law (IRS). Some governmental plans and plans under collective bargaining agreements have a later start date.
A few practical points:
- The threshold looks at last year's wages from the employer that sponsors the plan, so a raise this year can make next year's catch-ups Roth.
- It applies to catch-ups in workplace plans, not to IRA catch-ups.
- If your plan doesn't offer a Roth option, ask HR how it's handling catch-up contributions for higher earners.
- Roth catch-ups aren't deducted from your taxable pay, so your taxable income will be higher than if they were pre-tax. If you were counting on that deduction, revisit your 2027 withholding or estimated payments.
What should I change before January?
Most people set a 401(k) percentage once and forget it. The new limits are a good reason to look again.
- Recalculate your deferral. To reach $25,500 over 26 biweekly paychecks, you'd defer about $981 per check. With 24 semimonthly paychecks, it's $1,062.50. If you're 50 or older and want the full $34,000, it's about $1,308 per biweekly check.
- Use the right catch-up amount. If you turn 60, 61, 62 or 63 in 2027, meaning you were born from 1964 through 1967, your catch-up limit is $11,750 instead of $8,500. Not every payroll system raises it automatically, so check your first few 2027 pay stubs.
- Don't miss the match. Some plans match each paycheck, so if you reach the limit early in the year, the match stops when your contributions do. Before you front-load, ask whether your plan makes a year-end "true-up" match.
- Pick Roth or traditional on purpose. Texas has no state income tax, so the decision comes down to your federal bracket now compared with what you expect in retirement. The 2027 tax brackets can help you estimate next year.
- Plan your IRA early. If your income may land inside a Roth phase-out range, decide in advance whether to contribute directly, contribute to a traditional IRA, or wait until you know your income.
If you're still deciding which account to fund first, our guide to tax-advantaged accounts walks through a common order.
What changes for business owners and the self-employed?
The overall limit on contributions to a defined contribution plan rises to $75,000 for 2027 (Notice 2026-66). That limit includes your own deferrals and your employer's contributions, but not catch-ups.
- Solo 401(k). You can defer up to $25,500 as the employee, plus any catch-up, and make employer contributions on top, up to the $75,000 total. If you're self-employed, compensation is figured with a special calculation, so the employer amount works out to less than 25% of your net profit (IRS Publication 560).
- SEP IRA. Contributions are limited to the lesser of 25% of compensation or $75,000.
- Compensation cap. Plans can count only the first $375,000 of compensation when they figure contributions. That's up from $360,000.
- SIMPLE plans. The employee deferral limit rises to $17,500, or $19,100 for certain SIMPLE plans. The age-50 catch-up stays at $4,000 for most SIMPLE plans.
If you also contribute to a 401(k) at another job, the $25,500 employee limit generally applies to all your plans combined (IRS). If your plan allows after-tax contributions, the $75,000 total limit is also what sets the room for a mega backdoor Roth.
What else changed for 2027?
- Qualified charitable distributions. If you're 70½ or older, you can give up to $114,000 directly from your IRA to charity in 2027, up from $111,000 (Notice 2026-66).
- The Saver's Credit is being replaced. Starting in 2027, the Saver's Match replaces the Saver's Credit for contributions to retirement plans and IRAs. The Saver's Credit still applies to contributions to ABLE accounts (Notice 2026-66).
Don't forget your 2026 contributions
The new limits don't start until January. Until then:
- 401(k) deferrals for 2026 have to come out of paychecks dated by December 31.
- IRA and HSA contributions for 2026 can generally be made until the April 2027 filing deadline.
- If a Roth conversion before December 31 is on your list, it's taxed at this year's rates.
Your 2027 checklist
- Look up your plan's deadline for changing contributions for January
- Recalculate your 401(k) deferral from the $25,500 limit, plus $8,500 or $11,750 if you're eligible for a catch-up
- Check your 2026 wages from your employer against the $155,000 Roth catch-up threshold
- Ask whether your plan makes a true-up match if you plan to front-load
- Estimate your 2027 income against the Roth IRA and traditional IRA phase-out ranges
- Update your HSA payroll contribution for the $4,500 or $9,000 limit if you're eligible
- If you own a business, review your solo 401(k), SEP or SIMPLE contributions against the new limits
- Finish your 2026 401(k) contributions by December 31
How we help
We can work through your payroll election, the Roth or traditional choice and your business retirement plan with you in a working session, using your actual pay stubs and tax return. Your accounts stay at your own brokerage.
Mercer Street's work is billed at $600 per hour with a 2-hour minimum ($1,200).
If you'd like help setting up your 2027 contributions, schedule a call.
Frequently asked questions
What is the 401(k) contribution limit for 2027?
The 2027 employee deferral limit for 401(k), 403(b), governmental 457 plans and the Thrift Savings Plan is $25,500, up from $24,500 in 2026. Workers 50 and older can add an $8,500 catch-up, for a total of $34,000. Workers who turn 60, 61, 62 or 63 in 2027 can add $11,750 instead, for a total of $37,250.
Did the IRA contribution limit go up for 2027?
No. The 2027 IRA contribution limit stays at $7,500, the same as 2026, and the catch-up for people 50 and older stays at $1,100, for a total of $8,600. The limit covers traditional and Roth IRAs combined. What did go up are the income ranges for deducting a traditional IRA contribution and for contributing to a Roth IRA.
What are the Roth IRA income limits for 2027?
For 2027, the ability to contribute directly to a Roth IRA phases out between $158,000 and $173,000 of modified adjusted gross income for single filers and heads of household, and between $250,000 and $260,000 for married couples filing jointly. For married people filing separately, the range stays at $0 to $10,000.
Do my 401(k) catch-up contributions have to be Roth in 2027?
They do if your 2026 wages from the employer that sponsors your plan are above $155,000. In that case, your 2027 catch-up contributions to that plan generally have to be designated Roth, meaning after-tax. Your regular contributions up to $25,500 can still be pre-tax. The rule doesn't apply to IRA catch-ups.
What is the 2027 limit for a solo 401(k) or SEP IRA?
The overall 2027 limit on contributions to a defined contribution plan, including a solo 401(k) or SEP IRA, is $75,000, up from $72,000. In a solo 401(k), you can defer up to $25,500 as the employee, plus any catch-up, and make employer contributions up to the overall limit. The compensation that counts toward the calculation is capped at $375,000.
When should I change my 401(k) contribution for 2027?
Before your first paycheck of 2027. 401(k) contributions can only come out of pay, so the deferral percentage or dollar amount you elect in December sets the pace for January. Recalculate it from the new $25,500 limit and your number of pay periods, and check your plan's open enrollment or contribution change deadline.
This article is for general educational purposes and is not individualized tax, legal, or investment advice. Tax laws change; confirm how current rules apply to your situation before acting.
