401(k): employee limit rises to $25,500 for 2027

What changed

The IRS raised the most an employee can put into a 401(k) from pay in 2027, pre-tax and Roth contributions combined, along with both catch-up limits. The same limits apply to 403(b) and most 457 plans.

Who this affects

Employers that sponsor a 401(k), 403(b) or governmental 457 plan, and the employees who contribute to it through payroll.

Exceptions that matter:

• The ages 60 to 63 catch-up takes the place of the age 50 and over catch-up, and applies only if the plan offers it.
• The total with employer money does not count catch-up contributions.
• A plan can set a lower limit than the IRS maximum.

What to do

Confirm payroll has the 2027 limits before your first January pay date, and tell employees who want to contribute more to change their election.

Primary source: IRS, November 12, 2026. Part of Compliance Watch, Issue 05 (November 13, 2026). Last reviewed November 13, 2026.

401(k) limits and your payroll

VertiSource HR runs payroll and payroll tax for its clients and provides 401(k) and retirement plans among its services. Each client has a direct line to their own payroll specialist, the same person year after year.

Ask us about a federal rule All 3 updates in Issue 05

General information from VertiSource HR, not legal or tax advice. How a rule applies depends on your company and your state. Check with us or your attorney before acting.