The IRS published the 2027 retirement plan limits on November 12, 2026, in News Release IR-2026-136 and Notice 2026-66, the official notice with every adjusted figure. Most numbers went up, the IRA limit did not, and one change matters more than it looks for business owners who pay themselves a W-2 salary. I have put every figure that affects my clients in one place below, with the 2026 number beside it, and then the decisions worth making before your first paycheck of 2027.
Nothing here changes what you can put away for 2026. The 2026 limits still apply to 2026 contributions, and several of the deadlines for those run well into 2027.
The 2027 limits at a glance
Workplace plans (401(k), 403(b), governmental 457 and the Thrift Savings Plan):
| Limit | 2026 | 2027 |
|---|---|---|
| Employee deferral (pre-tax and Roth combined) | $24,500 | $25,500 |
| Catch-up, age 50 and over | $8,000 | $8,500 |
| Total deferral at 50 and over | $32,500 | $34,000 |
| Catch-up for those turning 60, 61, 62 or 63 (replaces the age-50 catch-up) | $11,250 | $11,750 |
| Total of all contributions to one person’s account, employer money included (section 415(c)) | $72,000 | $75,000 |
| Pay a plan can count (section 401(a)(17)) | $360,000 | $375,000 |
| Prior-year wages that make catch-ups Roth-only | $150,000 | $155,000 |
IRAs:
| Limit | 2026 | 2027 |
|---|---|---|
| Traditional and Roth IRA contribution | $7,500 | $7,500 |
| IRA catch-up, age 50 and over | $1,100 | $1,100 |
Plans for business owners and the people who run them:
| Limit | 2026 | 2027 |
|---|---|---|
| SIMPLE IRA and SIMPLE 401(k) deferral | $17,000 | $17,500 |
| SIMPLE deferral for certain eligible (smaller) employers | $18,100 | $19,100 |
| SIMPLE catch-up, age 50 and over | $4,000 | $4,000 |
| SIMPLE catch-up for those turning 60 to 63 | $5,250 | $5,250 |
| Defined benefit (cash balance) annual benefit | $290,000 | $300,000 |
| Highly compensated employee pay threshold | $160,000 | $170,000 |
| Key employee pay threshold (top-heavy testing) | $235,000 | $245,000 |
| Pension-linked emergency savings account cap | $2,600 | $2,700 |
| Qualifying longevity annuity (QLAC) premium cap | $210,000 | $220,000 |
The 401(k) deferral limit is $25,500
The $25,500 limit is per person, not per plan. If you work two jobs, or change jobs mid-year, your deferrals to every 401(k) and 403(b) you participate in share one $25,500 limit. The one exception is a governmental 457 plan, which has its own separate limit, so a public employee with both a 403(b) and a 457 can defer the full amount to each.
The limit covers pre-tax and Roth deferrals together. Employer matching and profit-sharing contributions do not count against it; they count against the larger $75,000 total.
Catch-ups: $8,500, or $11,750 if you turn 60 to 63
If you are 50 or older at any point in 2027, you can defer another $8,500, for $34,000 in all. If you turn 60, 61, 62 or 63 during 2027 (born in 1964 through 1967), the catch-up is $11,750 instead, for $37,250 in all. The higher figure is not added to the $8,500; it replaces it. At 64 you drop back to the regular catch-up.
Not every plan offers the higher age 60 to 63 catch-up, so check with your plan or HR before you set your 2027 election.
Higher earners: catch-ups go in as Roth
Under SECURE 2.0, if your FICA wages from the employer sponsoring the plan were more than the threshold in the prior year, your catch-up contributions must be Roth. For 2027 catch-ups, the test is whether your 2026 wages from that employer were over $155,000. The statute took effect in 2026 with a good-faith standard, and the IRS final regulations apply in full from 2027.
Two consequences people miss:
- If your plan does not offer Roth, you cannot make catch-ups at all once you are over the threshold. Many plans added a Roth option for exactly this reason. It is worth confirming yours did.
- It turns on W-2 wages, not income. Sole proprietors and partners have no FICA wages from their business, so the rule does not apply to them at any income. An S-corporation owner who pays himself or herself a salary does have W-2 wages, so it applies to them like any employee. I come back to this below.
Roth catch-ups are not a bad outcome. You lose the deduction now and get tax-free growth and withdrawals later, which for many people in their 50s and 60s is a fair trade. It just changes your 2027 paycheck, because the catch-up no longer reduces taxable pay.
IRAs: the limit stays at $7,500
The IRA contribution limit did not move. You can put $7,500 into traditional and Roth IRAs combined for 2027, plus $1,100 if you are 50 or older, for $8,600. The limit is shared across all your IRAs.
What did move are the income ranges that decide who can contribute to a Roth IRA directly and who can deduct a traditional IRA contribution.
Roth IRA income limits for 2027
| Filing status | 2026 phase-out range | 2027 phase-out range |
|---|---|---|
| Single or head of household | $153,000 to $168,000 | $158,000 to $173,000 |
| Married filing jointly | $242,000 to $252,000 | $250,000 to $260,000 |
| Married filing separately | $0 to $10,000 | $0 to $10,000 |
Below the range you can contribute the full amount. Inside it your limit shrinks, and above it you cannot contribute to a Roth IRA directly. Above the range, a backdoor Roth still works, but only cleanly if you have no pre-tax IRA balances on December 31 of the year you convert. My backdoor Roth pro-rata calculator shows how much of a conversion would be taxed if you do.
Traditional IRA deduction limits for 2027
Anyone with earned income can contribute to a traditional IRA. Whether you can deduct it depends on your income and whether you or your spouse is covered by a workplace plan.
| Situation | 2026 phase-out range | 2027 phase-out range |
|---|---|---|
| Single, covered by a workplace plan | $81,000 to $91,000 | $83,000 to $93,000 |
| Married filing jointly, contributing spouse covered | $129,000 to $149,000 | $133,000 to $153,000 |
| Married filing jointly, contributing spouse not covered but the other spouse is | $242,000 to $252,000 | $250,000 to $260,000 |
| Married filing separately, covered | $0 to $10,000 | $0 to $10,000 |
If neither of you is covered by a workplace plan, the contribution is fully deductible at any income.
What changed for business owners
This is where the $75,000 total and the $375,000 pay cap do most of their work.
Solo 401(k): up to $75,000, more with catch-ups
A solo 401(k) lets you contribute in two roles. As the employee you can defer up to $25,500, plus catch-ups. As the employer you can add up to 25% of your W-2 pay (S-corporation) or about 20% of your net self-employment earnings (sole proprietor). The two together cannot exceed $75,000, not counting catch-ups.
With catch-ups, the 2027 ceiling is $83,500 at 50 and over, or $86,750 if you turn 60 to 63.
A worked example. An S-corporation owner, age 52, pays herself a $150,000 salary in 2027:
| Piece | Amount |
|---|---|
| Employee deferral | $25,500 |
| Employer contribution, 25% of $150,000 | $37,500 |
| Subtotal (under the $75,000 cap) | $63,000 |
| Age-50 catch-up | $8,500 |
| Total for 2027 | $71,500 |
To reach the full $75,000 before catch-ups, an S-corporation owner needs a salary of about $198,000 ($25,500 deferred plus 25% of $198,000). A sole proprietor gets there at about $247,500 of net self-employment earnings after the deduction for half of self-employment tax. To run your own figures, use my Solo 401(k) vs SEP IRA calculator.
The Roth catch-up rule matters here. Her catch-up depends on her 2026 W-2 wages from the S-corporation. At $150,000 in 2026 she is under the $155,000 threshold, so she can make her 2027 catch-up pre-tax. If she had paid herself $160,000 in 2026, it would have to be Roth. A sole proprietor in the same position would not face the question at all. When I help an owner set a reasonable S-corp salary, this is now one more factor in the number.
SEP IRA: up to $75,000
A SEP IRA takes employer money only, up to 25% of each eligible person’s W-2 pay or about 20% of a self-employed owner’s net earnings, capped at $75,000. Only the first $375,000 of pay counts. An S-corporation owner reaches the cap at a $300,000 salary; a sole proprietor at about $375,000 of net self-employment earnings after the half self-employment tax deduction.
A SEP has no employee deferral, so at the same income a solo 401(k) lets you put away more until your pay is high enough for 25% to fill the whole $75,000 on its own.
401(k) with profit sharing, and cash balance plans
For an owner with employees, the $75,000 total per person and the $375,000 pay cap carry straight into a 401(k) with profit sharing. A cash balance plan on top is limited instead by the annual benefit it could pay at retirement, now $300,000 a year, which for owners in their 50s and 60s can mean deductible contributions well above $100,000 a year. I go through how the three fit together in my small business 401(k), profit sharing and cash balance guide, and it is the core of the retirement plan work I do for businesses.
Highly compensated employees: $170,000
The highly compensated employee threshold rises to $170,000. It works on a look-back. For most plans, an employee who earned more than $160,000 in 2026 is a highly compensated employee for the 2027 plan year, and the new $170,000 figure applies to 2027 pay when the plan tests 2028. Owners of more than 5% of the business count as highly compensated at any pay. If your plan has failed nondiscrimination testing before, the higher threshold can move a few employees out of that group, which may help.
SIMPLE IRAs
The SIMPLE deferral limit rises to $17,500, or $19,100 for certain smaller employers that qualify for the higher SECURE 2.0 limit. Catch-ups did not change: $4,000 at 50 and over ($3,850 in plans using the higher limit) and $5,250 for those turning 60 to 63.
What to do before January
- Reset your 2027 payroll election. Most plans do not raise your deferral automatically. If you want the full $25,500 (or $34,000, or $37,250), set it before your first 2027 paycheck. Spreading it over the year matters if your employer’s match is calculated per paycheck.
- If you turn 60 to 63 in 2027, ask about the higher catch-up. Confirm your plan offers it and set your election to use it.
- If your 2026 wages from your employer will be over $155,000, plan for Roth catch-ups. Check that your plan offers Roth, and expect a slightly smaller 2027 paycheck since the catch-up will no longer lower your taxable pay.
- Business owners: decide the 2027 plan design now. Salary for an S-corporation owner, whether a solo 401(k) beats a SEP, and whether a cash balance plan is worth adding are all easier to set up before the year starts.
- Finish 2026 first. 401(k) deferrals for 2026 must come out of 2026 paychecks by December 31. IRA contributions for 2026 can be made until April 15, 2027. SEP and other employer contributions for 2026 can be made until your 2026 tax filing deadline, including extensions.
If you would like help fitting these limits to your own pay, plan and taxes, that is the work I do every year with clients, and you can book a call to talk it through.
Frequently asked questions
What is the 401(k) contribution limit for 2027?
$25,500 of employee deferrals, up from $24,500 in 2026. If you are 50 or older you can add an $8,500 catch-up, for $34,000. If you turn 60, 61, 62 or 63 in 2027, the catch-up is $11,750 instead, for $37,250.
Did the IRA limit go up for 2027?
No. The IRA contribution limit stays at $7,500 for 2027, and the age-50 catch-up stays at $1,100. The income ranges for Roth IRA contributions and traditional IRA deductions did go up.
What is the most that can go into a 401(k) in 2027 including employer contributions?
$75,000 per person from all sources, up from $72,000, not counting catch-up contributions. With catch-ups, $83,500 at 50 and over, or $86,750 for someone turning 60 to 63 in 2027.
Who has to make catch-up contributions as Roth in 2027?
Anyone whose 2026 FICA wages from the employer sponsoring the plan were more than $155,000. Sole proprietors and partners have no FICA wages from their business, so the rule does not apply to them. S-corporation owners paid a W-2 salary are covered like any employee.
What are the Roth IRA income limits for 2027?
The phase-out range is $158,000 to $173,000 for single filers and heads of household, and $250,000 to $260,000 for married couples filing jointly. Above the top of the range you cannot contribute to a Roth IRA directly.
Can I still make 2026 contributions under the 2026 limits?
Yes. IRA contributions for 2026 can be made until April 15, 2027, and SEP and other employer contributions for 2026 until your 2026 tax filing deadline, including extensions. 401(k) employee deferrals for 2026 must come out of 2026 pay.
This article is for general education and is not tax, legal or investment advice for your situation. Talk with your tax and legal advisors before acting.
Sources
- IRS News Release IR-2026-136, “401(k) limit increases to $25,500 for 2027, IRA limit remains $7,500” (November 12, 2026)
- IRS Notice 2026-66, 2027 Amounts Relating to Retirement Plans and IRAs, as Adjusted for Changes in Cost-of-Living
- IRS News Release IR-2025-91, final regulations on the Roth catch-up rule and other SECURE 2.0 provisions (September 15, 2025)
- 26 CFR 1.414(v)-2, Catch-up contributions (final regulations)
- 26 U.S. Code 415, Limitations on benefits and contribution under qualified plans
- 26 U.S. Code 414(v), Catch-up contributions for individuals age 50 or over
- IRS Publication 560, Retirement Plans for Small Business
- IRS Publication 590-A, Contributions to Individual Retirement Arrangements