IRS lifts 2027 retirement contribution caps, with bigger catch-up slots for older savers

What changed for 2027 contributions

Your paycheck deferral room gets a bump. The employee limit for workplace plans rises to $25,500 for 2027 from $24,500 in 2026, and it applies to 401(k), 403(b) and most 457 plans, plus the federal Thrift Savings Plan.

Catch-ups climb too. Savers 50 and older can add $8,500 on top of the base limit in 2027, up from $8,000. Workers ages 60 to 63 get an even larger Secure 2.0 catch-up of $11,750, which is $500 above 2026.

IRAs are unchanged. The 2027 IRA contribution limit stays at $7,500, and the IRA catch-up for age 50 and up remains $1,100. The IRS also raised the income thresholds for making Roth IRA contributions.

How people are actually saving

Plenty of workers still leave room unused. The average total savings rate, counting employer money, was an estimated 12.1%.

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Automation can help: in 2025, 27% of plans used auto escalation, and among those, 69% nudged deferrals higher by 1% per year, according to the Plan Sponsor Council of America's survey of 753 plans.

What this means for your portfolio

If you aim to hit the new ceiling in 2027, adjust your payroll deferral in December so it is ready for your first January paycheck. Expect a brief delay, since many employers need one or two pay periods to process changes.

He called steady increases the "most important habit," adding that "you may barely notice the difference in your paycheck, but the long-term impact can be substantial."

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