FLASHPOINT: IRS ANNOUNCES 2027 COST OF LIVING ADJUSTMENTS TO VARIOUS RETIREMENT PLAN LIMITS
The IRS just released the cost-of-living adjustments for various retirement plan limitations that will take effect on January 1, 2027. The rate of inflation recently rose to 3.7% and as a result, the adjustments reflect this increase. Think of it as good news/bad news. Good news – we get to save more money. Bad news – we’ll need it because everything is more expensive. The limits that increased for 2027 are shown below in blue bold italics in the chart below.
The 2027 and prior years’ limits are as follows:
| Limit Type | For Calendar Year | |||
|---|---|---|---|---|
| 2027 | 2026 | 2025 | 2024 | |
| Maximum DB Plan Benefit (IRC §415(b)) (applies to limitation years ending in indicated year) |
$300,000 | $290,000 | $280,000 | $275,000 |
| Max DC Annual Addition (IRC §415(c)) (applies to limitation years ending in indicated year) |
$75,000 | $72,000 | $70,000 | $69,000 |
| Salary Deferral Limit (IRC §402(g)) | $25,500 | $24,500 | $23,500 | $23,000 |
| Catch-up Limit for 401(k), 403(b), 457 plans (applies to calendar year) |
$8,500 | $8,000 | $7,500 | $7,500 |
| Catch-up Limit (age 60-63) for 401(k), 403(b), 457 plans (applies to calendar year) |
$11,750 | $11,250 | $11,250 | |
| Roth Catch-up HPI Limit (IRC §414(v)(7)(a)) | TBD next year | $155,000 | $150,000 | |
| HCE Compensation (applies to lookback years in indicated year) |
$170,000 | $160,000 | $160,000 | $155,000 |
| Max Plan Compensation for Retirement Plan Purposes (IRC §401(a)(17)) (applies to plan years beginning in indicated year) |
$375,000 | $360,000 | $350,000 | $345,000 |
| Key Employee: Officer | $245,000 | $235,000 | $230,000 | $220,000 |
| Key Employee: 1% Owner | $150,000 | $150,000 | $150,000 | $150,000 |
| Social Security Taxable Wage Base for OASDI Contributions | $192,300 | $184,500 | $176,100 | $168,600 |
| Maximum Domestic Abuse Distribution (IRC §72(t)(2)(K)(ii)(1)) |
$10,900 | $10,500 | $10,300 | $10,000 |
| 457(b) Contribution Limit | $25,500 | $24,500 | $23,500 | $23,000 |
| Starter 401(k) Deferral-only Arrangement Limit | $6,500 | $6,000 | $6,000 | $6,000 |
| Starter 401(k) Deferral-only Catch-Up | $1,100 | $1,100 | $1,000 | $1,000 |
| SIMPLE Salary Deferral Limit | $17,500 | $17,000 | $16,500 | $16,000 |
| SIMPLE Salary Deferral Limit ( <25 participants or larger election) (IRC §408(p)(2)(E)(i)(l)) | $19,100 | $18,100 | $17,600 | |
| SIMPLE Catch-up Limit | $4,000 | $4,000 | $3,500 | $3,500 |
| SIMPLE Catch-up Limit (age 60-63) | $5,250 | $5,250 | $5,250 | |
| SIMPLE Nonelective Contribution Limit | $5,400 | $5,300 | $5,100 | |
| IRA Contribution Limit (IRC §219(b)(5)(A)) | $7,500 | $7,500 | $7,000 | $7,000 |
| IRA Catch-up Limit (IRC §219(b)(5)(B)(iii)) | $1,100 | $1,100 | $1,000 | $1,000 |
| SEP Threshold | $800 | $800 | $800 | $750 |
| ESOP: 5-year Distribution Factor | $300,000 | $290,000 | $280,000 | $275,000 |
| ESOP: Account Balance | $1,505,000 | $1,455,000 | $1,415,000 | $1,380,000 |
| Premiums for QLACs (Treas. Reg. §1.401(a)(9)-6(q)(2)(ii)) | $220,000 | $210,000 | $210,000 | $200,000 |
May 2027 bring all of you health, wealth, and abundant joy! If you have any questions, please let us know.
Remember: we are your ERISA solution!
- Posted by Ferenczy Benefits Law Center
- On November 12, 2026