The annual contribution limit for employees enrolled in 401(k) plans is $25,500 for 2027, the IRS announced Thursday, marking the agency’s second consecutive $1,000 year-over-year increase for enrollees.
The new limit also applies to those participating in 403(b) plans, governmental 457 plans and the federal government’s Thrift Savings Plan. IRS announced a smaller increase in the limit to catch-up contributions for these accounts to $8,500, compared to last year’s $8,000 limit. A higher catch-up contribution limit applies to participants ages 60 through 63.
However, the agency did not increase the contribution cap for individual retirement accounts, which remains at $7,500 for next year. Similarly, the IRA catch-up contribution limit remains $1,100.
The update comes as the Trump administration continues its efforts to adjust employer-sponsored retirement benefits regulations. Notably, the U.S. Department of Labor recently advanced its anticipated final rule permitting investors in defined-contribution plans, such as 401(k) plans, to access “alternative assets” within those plans.
DOL’s rule follows a 2025 executive order issued by President Donald Trump that tasked the agency with reevaluating its guidance so that investors could invest plan funds in private equity, real estate and cryptocurrency, among other categories. The rule is currently under White House review as of Nov. 5.
The alternative assets rule drew criticism from parties including Sens. Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt. The pair sent a letter to DOL in September expressing concerns that public comments submitted in support of the rule had been “fabricated” and requesting additional information about the agency’s efforts to identify such comments and whether the agency would rely upon them.
Research suggests a large share of American workers continue to struggle with retirement planning, and 35% of those surveyed in May by MyPerfectResume said that they delayed their planned retirement age within the previous three years. The same poll found that 14% of respondents didn’t expect ever to fully retire, a sentiment shared by 1 in 5 Generation X workers surveyed by Zety.
Employers revisiting their retirement benefits offerings may want to consider measures to boost engagement, which is a common retirement readiness hurdle for employees, according to a July report issued by Aon’s NFP.
