A sign for the Internal Revenue Service (IRS) is seen outside its building on February 13, 2025 in Washington, DC. Members of Elon Musk's Department of Government Efficiency (DOGE) arrived at the Internal Revenue Service to begin examining the agency
The Internal Revenue Service this week raised the maximum amount workers can contribute to their 401(k) retirement plans, and Roth IRAs, but did not change the limit for traditional IRAs.
The increased limits are designed to help American workers save even more each year for their golden years.
By the numbers:
The IRS said workers will be able to contribute up to $25,500 per year to their 401(k) plan in 2027, up from $24,500 in 2026. That represents an increase of roughly $19.23 per week.
The increase also applies to 403(b), governmental 457 plans and the federal government’s Thrift Savings Plan. The amount is the total that workers can contribute either to a 401(k) or a Roth 401(k) or a combination of both.
The catch-up contribution that typically applies to workers 50 and over who participate in most 401(k), 403(b), governmental 457 plans and the Thrift Savings Plan, increased by $500 to $8,500 for 2027.
With the regular contribution and catch-up contribution combined, workers 50 and up can contribute a total of $34,000 over the course of the year beginning in 2027.
However, workers who participate in these plans and are 60, 61, 62 and 63 years old have a higher catch-up contribution limit of $11,750. The "super" catch-up option expires once you turn 64.
For workers 64 years old or older, the $25,500 contribution limit and $8,500 catch-up contribution limit applies.
What they're saying:
"Along with the Working Families Tax Cuts, this increase in the pension limitations will help American families keep more of their hard-earned income," IRS Chief Executive Officer Frank J. Bisignano said. "With the new adjustment in place now, the IRS is giving taxpayers and employers the information needed to make retirement planning decisions for the year ahead."
What Didn't Change:
But the limit on contributions to an Individual Retirement Account stayed at $7,500. The IRA catch-up contribution limit for people 50 and over remains at $1,100.
What you can do:
Fidelity recommends a goal of saving at least 15% of your income each year, including any employee contributions, for your retirement.
To do so, start saving as early as you can and take full advantage of your employer’s 401(k0 match. If, for example, your employer says they will match 50 cents to every dollar you contribute up to 6%, financial advisors recommend that workers contribute at least 6% so they get the highest possible employer match as well.
The Source: Information for this story came from the Internal Revenue Service and Fidelity. This story was reported out of Orlando.