You Can Save $1,000 More in Your 401(k) Next Year: The IRS's New 2027 Limits, and the Bigger Break for Workers in Their Early 60s

Americans who are working to build a nest egg will get a little more room to do it next year. The Internal Revenue Service announced on Nov. 12 that the amount workers can put into a 401(k) plan in 2027 rises to $25,500, up from $24,500 this year ^[1]. The same limit applies to 403(b) plans, most 457 plans and the federal government's Thrift Savings Plan, according to the IRS ^[1].

The changes come in IRS Notice 2026-66, the agency's annual cost-of-living update to retirement-plan limits ^[1][5]. The law ties the limits to inflation, so they rise automatically when prices do.

The Numbers That Matter

Here is what changes for 2027, according to the IRS and CNBC ^[1][2]:

• 401(k), 403(b), most 457 plans and the Thrift Savings Plan: $25,500, up from $24,500.
• Catch-up contributions for workers 50 and older: $8,500, up from $8,000, which means most workers in that group can save a total of $34,000 a year.
• The higher catch-up for workers ages 60 through 63: $11,750, up from $11,250, allowing eligible workers to put away as much as $37,250 ^[1][3].
• Traditional and Roth IRAs: unchanged at $7,500, with the IRA catch-up for people 50 and older staying at $1,100 ^[1].

The age-60-to-63 catch-up was created by the SECURE 2.0 retirement law and is aimed at people in the last stretch before retirement, when many are at their peak earning years and most motivated to make up for lost time ^[3].

A Change for Higher Earners

There is one wrinkle for people with bigger paychecks. Under SECURE 2.0, workers whose wages exceed a set threshold must make their catch-up contributions as Roth contributions, meaning they pay tax on the money now and withdraw it tax-free later. For 2027 that threshold rises to $155,000, up from $150,000, according to the IRS notice ^[1][3].

The IRS also raised the income ranges that determine who can contribute to a Roth IRA, so slightly more households will qualify next year ^[1]. And the overall annual cap on combined employer and employee contributions to plans like a SEP IRA rises to $75,000 from $72,000, The College Investor reported ^[4].

How to Make the Most of It

A bigger limit only helps if you use it. A few steps can make a difference:

• Update your payroll election before January. Most plans let you choose a percentage of pay; if your goal is to max out, divide $25,500 by the number of paychecks you get in a year and adjust.
• Get every dollar of the match. If your employer matches contributions, contributing at least enough to collect the full match is the closest thing to free money in personal finance.
• Use the catch-up if you are 50 or older. Many workers in their 50s and early 60s are past the most expensive years of raising children and can finally save more aggressively.
• Think about Roth versus traditional. Workers who expect higher taxes in retirement may prefer Roth contributions, and some higher earners will be required to use Roth for catch-ups under the new rules ^[1][3].

Why It Matters

Saving for the future is one of the oldest virtues there is. Scripture praises the ant that stores up its food in summer, and generations of Americans built security for their families through steady, patient thrift. A 401(k) is a modern tool for that old habit, and it works best for those who start early and stay consistent.

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The higher limits will matter most to families who are already saving hard and to workers racing to catch up before retirement. For everyone else, the message is the same one financial planners have been giving for decades: start where you can, raise your contribution a little each year and let time do the work.

What Comes Next

The new limits take effect on Jan. 1, 2027 ^[1]. Employers and plan administrators typically update their systems before the new year, and industry groups have already begun alerting plan sponsors to the new figures ^[5][6]. Workers should check their January pay stubs to make sure their contributions reflect the choices they made.