IRS raises 2027 401(k) limit to $25,500 in Notice 2026-66

The IRS will raise the employee contribution limit for 401(k) plans to $25,500 in 2027, a $1,000 increase over the 2026 cap of $24,500, under Notice 2026-66 issued Thursday. The same limit applies to Sec. 403(b) plans, most Sec. 457 plans and the federal government's Thrift Savings Plan — a change payroll and benefits teams will need loaded into enrollment systems before the plan year begins.

The IRA contribution story is different. The annual limit for traditional and Roth IRAs holds at $7,500 for 2027, and the IRA catch-up contribution for savers 50 and older remains $1,100. For employers, the asymmetric adjustment means communication materials for 2027 should distinguish between plan-sponsored accounts, which rise, and IRAs, which do not.

What changes for older workers?

The catch-up contribution limit for employees aged 50 and over in most 401(k), 403(b) and governmental 457 plans, plus the Thrift Savings Plan, increases by $500 to $8,500 for 2027. Under the SECURE 2.0 Act of 2022 (Division T of the Consolidated Appropriations Act, 2023, P.L. 117-328), a still-higher catch-up tier applies to employees aged 60, 61, 62 or 63. That super catch-up limit rises to $11,750 in 2027 from $11,250 — roughly $3,250 more than the standard age-50 catch-up.

That three-tier structure — $25,500 base, $8,500 at 50, $11,750 at ages 60 through 63 — creates the main payroll configuration task, since an employee's cap can change mid-career and again near retirement.

How do the IRA deduction phaseouts move?

Income ranges for deducting traditional IRA contributions, contributing to Roth IRAs and claiming the saver's credit all increased for 2027. Where a taxpayer or their spouse is covered by a workplace retirement plan, the traditional IRA deduction phases out within these ranges:

• Single filers covered by a workplace plan: $83,000 to $93,000, up from $81,000 to $91,000 in 2026.
• Married filing jointly, contributing spouse covered: $133,000 to $153,000, up from $129,000 to $149,000.
• Contributing spouse not covered, married to someone who is covered: $250,000 to $260,000, up from $242,000 to $252,000.
• Married filing separately and covered: unchanged at $0 to $10,000, a range that receives no annual cost-of-living adjustment.

Taxpayers not covered by a workplace plan — and whose spouses are also uncovered — face no phaseout on the traditional IRA deduction at all.

Where do Roth IRA limits land?

Roth IRA contribution eligibility phases out at higher incomes in 2027:

• Singles and heads of household: $158,000 to $173,000, up from $153,000 to $168,000.
• Married couples filing jointly: $250,000 to $260,000, up from $242,000 to $252,000.
• Married individuals filing separately: unchanged at $0 to $10,000, with no inflation adjustment.

What is the saver's credit income ceiling?

The adjusted gross income limit for the saver's credit — the retirement savings contribution credit for low- and moderate-income workers — rises across every filing status for 2027:

• Married filing jointly: $83,000, up from $80,500.
• Heads of household: $62,250, up from $60,375.
• Singles and married filing separately: $41,500, up from $40,250.

For a married couple at the ceiling, the credit now reaches households earning about $2,500 more than in 2026 — a modest bump that benefits teams can flag in financial-wellness messaging to hourly and lower-paid populations.

What should employers do next?

Plan administrators should confirm that payroll vendors apply the new figures in January and that auto-escalation and catch-up logic reflects the SECURE 2.0 age-60-to-63 tier. Notice 2026-66 sets the frame for 2027 plan design, and HR teams that benchmark matching formulas against the higher caps now will have enrollment materials ready before open season.