The Internal Revenue Service (IRS) announced the 2027 cost-of-living adjustments to various benefit and contribution limits applicable to retirement plans. The IRS modestly increased the applicable limits for 2027. The following limits apply to retirement plans in 2027:
- The limit on elective deferrals under 401(k), 403(b), and eligible 457(b) plans increased to $25,500.
- The limit on catch-up contributions by participants aged 50 or older is increased to $8,500. This means that the maximum amount of elective deferral contributions for those participants in 2027 is $34,000.
- The enhanced catch-up contribution limit for those ages 60-63 in 2027 increased to $11,750. This means that the maximum amount of elective deferral contributions for these participants in 2027 is $37,250.
- The Internal Revenue Code (Code) Section 415 annual addition limit is increased to $75,000 for 401(k) and other defined contribution plans, and the annual benefit limit is increased to $300,000 for defined benefit plans.
- The limit on the annual compensation that can be taken into account by qualified plans under Code Section 401(a)(17) is increased to $375,000.
- The dollar level threshold for becoming a highly compensated employee (HCE) under Code Section 414(q) is increased to $170,000 (which, under the look-back rule, applies to HCE determinations in 2028 based on compensation paid in 2027).
- The dollar level threshold for becoming a key employee in a top-heavy plan under Code Section 416(i)(1) is increased to $245,000.
- The Roth catch-up wage threshold is increased to $155,000 (which applies to determinations in 2027 based on FICA wages in 2026).
We have compiled a chart summarizing the key limits below, including how they compare with those in the previous years. For a printable version of the chart, please click here
COMPENSATION AND BENEFITS LIMITS |
|||
| 2027 | 2026 | 2025 | |
| 401(k)/403(b) Plan Deferral Limit | $25,500 | $24,500 | $23,500 |
| Catch-Up Contributions (401(k), 403(b) & Governmental 457(b) Plans) | $8,500
($11,750 for those ages 60-63) |
$8,000
($11,250 for those ages 60-63) |
$7,500
($11,250 for those ages 60-63) |
| Defined Contribution Dollar Limit | $75,000 | $72,000 | $70,000 |
| Defined Benefit Annual Limit | $300,000 | $290,000 | $280,000 |
| Pay Threshold for Determining Highly Compensated Employee | $170,000 (for determinations in 2028) | $160,000 (for determinations in 2027) | $160,000 (for determinations in 2026) |
| Annual Compensation Limit | $375,000 | $360,000 | $350,000 |
| 457(b) Plan Deferral Limit | $25,500 | $24,500 | $23,500 |
| Wage Threshold for Roth Catch-up Contributions | $155,000 (of FICA wages in 2026 for determinations in 2027) | $150,000 (of FICA wages in 2025 for determinations in 2026) | N/A |
| Social Security Taxable Wage Base | $192,300 | $184,500 | $176,100 |
Contact your Faegre Drinker benefits attorney with questions or for assistance with implementing the new retirement plan limits.