2027 401(k) Limits Expected to Rise to $25,500: How to Pair It With Your Raise

If you’re getting a raise in 2027, there’s a good chance the amount you’re allowed to save in your 401(k) is going up too. The IRS hasn’t published the official 2027 retirement plan limits yet, but the two big benefits consulting firms that forecast them every year now agree on the numbers. Here’s what’s expected, why it matters for your paycheck, and how to use next year’s raise to grow your savings without feeling the pinch.

The expected 2027 numbers

Retirement plan limits are tied to inflation. Specifically, they track the Consumer Price Index from the third quarter of one year to the third quarter of the next. Once September’s inflation data came out in mid-October, forecasters had everything they needed. Both Marsh (formerly Mercer) and Milliman, as reported by 401(k) Specialist, landed on the same projections:

• Employee deferral limit for 401(k), 403(b) and governmental 457 plans: $25,500, up $1,000 from $24,500 in 2026.
• Catch-up for ages 50 and older: $8,500, up from $8,000.
• Higher catch-up for ages 60 to 63: $11,750, up from $11,250. That means someone in that age window could defer up to $37,250 in total.
• Total annual additions (your money plus your employer’s): $75,000, up from $72,000.
• Roth catch-up wage threshold: $155,000, up from $150,000.

One important caution: these are projections, not IRS figures. The IRS’s own contribution limits page still lists 2026 as the latest year ($24,500, with an $8,000 catch-up). The agency usually announces the new limits in late October or November. The 2026 limits came out on November 13, 2025, and the 2025 limits on November 1, 2024. Forecasts based on final inflation data are usually right, but check the IRS release before you set anything in stone.

Why a higher limit matters even if you don’t max out

Most workers never hit the deferral cap, so it’s fair to ask why this matters. The answer is that the annual limit update is a natural moment to revisit how much you save, and it lines up with the time most people get their raise. Employers are planning raises of roughly 3.5% for 2027 (we covered the details in our 2027 raise forecast). If your pay goes up and your contribution percentage stays the same, your savings grow a little automatically. But if you bump the percentage at the same time, you can save meaningfully more without your take-home pay ever going down.

Here’s a simple example. Say you earn $60,000 and contribute 6%, or $3,600 a year. A 3.5% raise takes you to $62,100. If you raise your contribution to 7% at the same time, you’d save $4,347 a year, about $747 more, while your gross pay before the contribution still rises by $2,100. Because traditional 401(k) contributions come out before income tax, the hit to your actual take-home is smaller than the extra amount you save. You end up with a bigger paycheck and a bigger retirement balance.

Don’t forget the match

Before thinking about the cap at all, make sure you’re getting your full employer match. A match is part of your compensation. If your company matches 50% of the first 6% you contribute and you only put in 3%, you’re leaving real money behind every pay period. If you’re not sure how your plan’s formula works, our 401(k) match explainer walks through the common setups and how to read your plan documents.

The Roth catch-up rule for higher earners

If you’re 50 or older and earn a solid salary, there’s a newer rule to know about. Under the SECURE 2.0 law, workers whose prior-year FICA wages from their employer were above a set threshold must make any catch-up contributions as Roth contributions. Roth money goes in after tax, so it doesn’t lower your taxable income now, but qualified withdrawals in retirement are tax-free.

For 2026, the threshold is $150,000 based on 2025 wages. Marsh projects that for 2027, the rule will apply to people whose 2026 FICA wages topped $155,000. If you’re near that line, a raise this year could push you over it for next year’s catch-up. It’s not a reason to turn down a raise, but it’s worth knowing so a payroll change doesn’t surprise you.

How to use the new limit with your 2027 raise

A few practical moves make this easy:

• Time it with your raise. Change your contribution rate in the same pay period your raise takes effect. You won’t miss money you never got used to seeing.
• Use auto-escalation if your plan has it. Many plans let you increase your rate by 1% each year automatically. Set it once and forget it.
• Check your benefits elections together. Open enrollment is also when health premiums and deductibles change. Those costs can quietly eat into a raise, so look at both at the same time. Our guide to open enrollment and rising health costs covers what to watch for.
• Max out gradually if the full amount feels out of reach. Going from $24,500 to $25,500 only matters if you’re already near the cap. For most people, an extra 1% or 2% of pay is the realistic and meaningful step.
• If you’re 60 to 63, use the bigger catch-up. These are often peak earning years, and the enhanced catch-up gives you a short window to save far more than younger workers can.

What to watch for next

The official IRS release should land within the next few weeks. When it does, it will also include the 2027 IRA limits, which are currently $7,500 with a $1,100 catch-up for people 50 and older, along with the new income ranges for deducting IRA contributions and for Roth IRA eligibility. Watch the IRS newsroom for that announcement, then update your payroll elections before your first paycheck of 2027.

A raise is the easiest time in the year to save more. If you plan the contribution increase alongside the pay increase, next year can bring both a bigger paycheck and a faster-growing retirement account.

Sources: Marsh, “Marsh projects 2027 retirement plan limits” (Oct. 15, 2026); 401(k) Specialist (Oct. 20, 2026); IRS, Retirement topics: Contributions. Projected figures are forecasts until the IRS publishes official 2027 limits. This article is general information, not tax or investment advice.