IRS announces higher 401(k) contribution limits for 2027

Americans will be able to contribute more to their workplace retirement savings plans in 2027 under new limits announced by the Internal Revenue Service.

The IRS announced Thursday that employees will be able to contribute up to $25,500 to their 401(k) plans next year, an increase of $1,000 from the current limit of $24,500.

The new contribution limit will also apply to 403(b) plans, most governmental 457 retirement plans and the federal government's Thrift Savings Plan.

The changes are part of the IRS' annual cost-of-living adjustments, which account for inflation.

Workers ages 50 and older will also be able to make additional catch-up contributions of up to $8,500 in 2027, an increase of $500 from this year. That brings their total potential annual contributions to $34,000 for most eligible workplace plans.

However, the annual contribution limit for individual retirement accounts (IRAs) will remain unchanged at $7,500. Those ages 50 and older can contribute an additional $1,100 to their IRAs.

The updated limits will take effect in January 2027, giving workers an opportunity to adjust their retirement savings contributions for the new year.