IRS Announces 2027 401(k) Limits: Base and Catch-Up Contributions
The IRS announced on 11/12/2026 that the employee elective-deferral limit for a standard 401(k) plan will rise from $24,500 to $25,500 for 2027. Eligible participants in plans that permit catch-up contributions may have an additional age-based allowance. These are 2027 limits; the announcement does not increase the limits for the remainder of 2026.
What does the $25,500 limit cover?
In Notice 2026-66, the IRS identifies $25,500 as the 2027 limit under Internal Revenue Code §402(g)(1) for employee elective deferrals. The notice lists other retirement-plan limits separately. One announced amount therefore cannot be applied across every type of retirement account.
The announcement implements the statutory annual adjustment mechanism. Section 402(g)(4) calls for the applicable cost-of-living calculation and provides that an increase that is not a multiple of $500 “shall be rounded to the next lowest multiple of $500.” The statute’s original base amount and the IRS’s adjusted amount for 2027 serve different roles.
How do the ordinary and ages 60–63 catch-up amounts differ?
Catch-up contributions have their own eligibility conditions. Section 414(v)(5)(A) uses the phrase “attain age 50 by the end of the taxable year” to establish the age threshold. The inquiry is whether the participant reaches that age by the end of the tax year, while the remaining catch-up conditions also continue to apply. Reaching age 50 alone does not establish eligibility to contribute the full maximum.
The IRS announcement sets the ordinary age-50-and-over catch-up limit for standard 401(k) plans at $8,500 for 2027, up from $8,000 for 2026. For an eligible participant who turns 60, 61, 62 or 63 during 2027, the higher catch-up limit is $11,750. That amount replaces the ordinary catch-up limit; the two catch-up amounts are not added together.
Adding the $25,500 base limit produces a combined dollar ceiling of $34,000 with the ordinary catch-up amount, or $37,250 with the higher ages 60–63 amount. Those figures are arithmetic totals of the applicable dollar limits, rather than a statement that every participant qualifies to contribute that much.
What limits remain on the scope of these figures?
Section 414(v)(1) addresses plans that permit catch-up contributions. Section 414(v)(2)(A) also limits the additional deferrals to the lesser of the applicable dollar amount or the participant’s compensation for the year remaining after other elective deferrals. Plan terms, compensation and other applicable restrictions therefore still affect the amount available to an individual participant.
Notice 2026-66 lists separate amounts for SIMPLE 401(k) plans and starter 401(k) arrangements; those arrangements do not use the standard 401(k) amounts reported here. The notice also separately updates the wage threshold used to determine whether 2027 catch-up contributions must be designated Roth contributions. The contribution ceiling and its tax treatment are distinct questions: age and a dollar limit alone do not establish the full contribution arrangement for an individual. This report is limited to the newly announced annual amounts and their directly related conditions.
Legal Disclaimer. Originally published: 11/13/2026. This article provides general information only and is not legal advice for any particular matter. Laws, policies, procedures, fees and agency practices may change; their application depends on the facts and jurisdiction. Consult a qualified attorney about your circumstances before acting on this information. Reading this article or contacting Blumsack & Canzano does not, by itself, create an attorney-client relationship. Past results do not guarantee future outcomes. This material may be considered attorney advertising in some jurisdictions.
