What Are the 2027 401(k) Contribution Limits?

The IRS has published the 2027 limits for 401(k) plans in Notice 2026-66. This post covers the numbers that change what employees can save, what your plan can hold, and how your plan is tested.

What Is the 401(k) Contribution Limit for 2027?

The 2027 deferral limit is $25,500, up from $24,500. The limit is per person, across every 401(k) and 403(b) plan an employee contributes to, and pre-tax and Roth deferrals count toward it together. Starter 401(k) and SIMPLE plans have their own 2027 limits:

• Starter 401(k): $6,500, plus $1,100 for employees who turn 50 or older
• SIMPLE IRA and SIMPLE 401(k): $17,500, with a higher $19,100 limit for some SIMPLE plans

What Are the 2027 401(k) Catch-Up Limits?

• Employees who turn 50 or older in 2027: $8,500, for a total of $34,000
• Employees who turn 60 to 63 in 2027: $11,750 in place of the $8,500, for a total of $37,250

For 2027, the Roth catch-up rule applies to employees whose 2026 FICA wages from your company were above $155,000. Any catch-ups those employees make in 2027 must be Roth contributions, so payroll needs 2026 wage information to apply the rule.

What Other 401(k) Limits Change in 2027?

• Total annual additions: $75,000 per participant. This counts employee and employer money together, not catch-ups.
• Compensation a plan can count: $375,000. Pay above this is ignored when figuring contributions.
• Highly compensated employee threshold: $170,000. In a calendar-year plan, 2027 pay from your company above this makes an employee an HCE for 2028, unless the plan uses the top-paid group election. If the deferral test for highly compensated employees has limited what they can save, a safe harbor plan design is worth a look.
• Key employee officer threshold: $245,000, used in top-heavy testing.

Before Your 2027 Plan Year Starts

Update the deferral and catch-up maximums in payroll, and flag every employee whose catch-ups must be Roth. If a 3(16) plan administrator runs your plan’s operations, confirm it has the new numbers too.  Download The 2027 401(k) Limits at a Glance above to keep every 2027 limit on one page, or Schedule a Brief Review with our team to go through your plan setup.

Plan Sponsor FAQs

Continue Reading

• What Separates the Best 401(k) Plans From the Rest?
• How Often Should You Review Your 401(k) Lineup?

Sources

• Internal Revenue Service, Notice 2026-66 (2027 cost-of-living adjustments for retirement plans)
• Internal Revenue Service, News Release IR-2026-136
• 26 U.S.C. 402(g), Limitation on Exclusion for Elective Deferrals
• 26 U.S.C. 414, Definitions and Special Rules (highly compensated employees and catch-up contributions)
• 26 U.S.C. 415(c), Limitation for Defined Contribution Plans

Important Disclosures

First Hill Trust Company is a Washington State-chartered trust company. Investment advisory services are provided by BAC Capital Advisors, an SEC-registered investment adviser and a wholly owned subsidiary of First Hill Trust Company. Registration does not imply a certain level of skill or training. This article is educational. Neither First Hill Trust Company nor BAC Capital Advisors is acting as ERISA counsel or tax counsel to any plan or plan sponsor, and nothing here replaces advice from qualified counsel about your own plan.

Accuracy and currency. Statutory provisions and regulatory descriptions in this article were checked against the cited primary sources as of the date of publication, but First Hill Trust Company and BAC Capital Advisors make no representation or warranty as to the accuracy, completeness, or timeliness of the information, and accept no liability for actions taken in reliance on it. Regulations and guidance change. Confirm current requirements with qualified counsel.

Educational purpose only. Provided by First Hill Trust Company for general informational and educational purposes only. It is not legal, tax, accounting, investment, or fiduciary advice, does not constitute a recommendation regarding any plan, investment, strategy, or course of action, and does not consider any recipient’s specific circumstances. Consult your own qualified advisors before acting.

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Statutory and regulatory references. References to ERISA, the Internal Revenue Code, and related statutory or regulatory provisions are general summaries only. They are not a substitute for review of the actual statutory text, regulations, or guidance from the Department of Labor, Internal Revenue Service, or other relevant authorities, and they do not address how those provisions may apply to any particular plan, sponsor, fiduciary, or individual. Laws, regulations, and guidance are subject to change and to interpretation by the relevant agencies and courts. Examples, categories, and situations described are simplified for illustration and may not reflect the requirements or circumstances of any particular plan or person.

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For more information, contact First Hill Trust Company at (206) 625-1800.