2027 401(k) Contribution Limit Projected at $25,000

Early indications point toward a $500 increase to the 401(k) contribution limit for employees next year—half the amount of the $1,000 boost given for 2026.

Milliman is out this week with its 2027 Internal Revenue Service (IRS) Limits Forecast to help retirement plan advisors and sponsors prepare for the changes to the limits for their retirement plans and its subsequent effects on labor costs, talent recruitment and retention efforts next year.

“Our March forecast projects the 401(k) deferral limit will increase by $500 to $25,000 in 2027, the super catch-up limit for those age 60 to 63 will increase by $500 to $11,750, while the regular catch-up limit will remain at $8,000.”

Milliman’s Nina Lantz

“Our March forecast projects the 401(k) deferral limit will increase by $500 to $25,000 in 2027, the super catch-up limit for those age 60 to 63 will increase by $500 to $11,750, while the regular catch-up limit will remain at $8,000,” Nina Lantz, Employee Benefits Research Director at Milliman, told 401(k) Specialist. “Employers may want to begin evaluating the implications of these higher limits on their labor costs and talent strategy heading into 2027.”

Lantz added that these projections assume the Consumer Price Index (CPI) through September 30, 2026 will be 3.3%—the same as the 12-month rate ending March 31, 2026—which is above both the 10- and 20-year historical averages.

The IRS typically releases the next-year official contribution limits for employees who participate in 401(k), 403(b), and most 457 plans, as well as the federal government’s Thrift Savings Plan in late October or early November, after calculations are made following the release of that September CPI data. The 2026 limits were announced on November 13, 2025.

After the close of federal fiscal year (FFY) 2026, the IRS will use the 12 months of the reported Consumer Price Index (CPI) to calculate the 2027 IRS limits. 

A summary of Milliman’s 2027 IRS Limits Forecast (March) is as follows:

• The maximum annual addition for DC plans will increase $3,000 from $72,000 in 2026 to $75,000 in 2027.

• The maximum §401(k), §403(b), §457 deferral for DC plans will increase $500 from $24,500 in 2026 to $25,000 in 2027.

• The catch-up contribution limit for DC plans is expected to remain at $8,000 in 2027, but the catch-up contribution limit for ages 60 to 63 is projected to increase by $500 from $11,250 in 2026 to $11,750 in 2027.

• The participant contribution limit to Emergency Savings Accounts (ESAs) for DC plans is projected to increase by $100, from $2,600 in 2026 to $2,700 in 2027. SECURE 2.0 permits plan sponsors to add ESAs to their DC plans, allowing non-HCEs to contribute to these accounts on a Roth basis. The portion of the account attributable to participant contributions is limited by law.

• The prior year wage threshold triggering Roth catch-up contributions to DC plans is projected to increase by $5,000 from $150,000 in 2026 to $155,000 in 2027.

• The covered compensation limit used in the pension plan’s benefit and contribution formula(s) is projected to increase by $15,000, from $360,000 in 2026 to $375,000 in 2027.

• The compensation threshold for highly compensated employees (HCEs) is projected to increase by either $5,000 OR$10,000, from $160,000 in 2026 to either $165,000 or $170,000 in 2027.

• The compensation threshold for key employees is projected to increase by $5,000, from $235,000 in 2026 to $240,000 in 2027.

• The maximum annual annuity pension for DB plans is projected to increase by $10,000, from $290,000 in 2026 to $300,000 in 2027.

• The domestic abuse withdrawal limit is projected to increase by either $300 OR $400, from $10,500 in 2026 to $10,800 or $10,900 in 2027.

Milliman’s limits forecast is projected using two assumption sets. One is based on the current trailing 12 months of CPI and the second assumes that year-to-date CPI (since September 30, 2025) will continue to increase each month through September 30, 2026, by an estimated 25 basis points (3.0% annual).

Since September 30, 2025, the Milliman forecast notes the CPI has increased by about 1.7%. Projecting monthly increases of 0.25% through September 2026 results in an annual increase of about 3.2% for its 6-month actual/6-month forecast projection.

On a related note, the IRS is expected to release 2027 Health Savings Account (HSA) contribution limits soon. The 2026 HSA contribution limits were released on May 1, 2025, raising the limit moderately from $4,300 in 2025 to $4,400 in 2026.

Check out Milliman’s 2027 Internal Revenue Service (IRS) Limits Forecast here.

SEE ALSO:

• Legislation Would Expand Employee Contributions to HSAs, Student Loan Debt
• IRS Announces 2026 401(k) Contribution Limit Increases to $24,500; IRA Limit Up to $7,500