Milliman and Marsh project $25,500 401(k) deferral limit for 2027

Milliman and Marsh have each published final forecasts for the 2027 contribution limits, and the two agree exactly on a $1,000 increase to the employee deferral limit. The figure moves from $24,500 this year to $25,500 next year for 401(k), 403(b) and eligible 457 plans. It is not yet official: 401(k) Specialist, which reported the matching forecasts, says the IRS announcement is expected in the coming weeks.

The age-50-and-older catch-up rises $500, from $8,000 in 2026 to $8,500 in 2027. The enhanced catch-up for participants aged 60 through 63 goes from $11,250 to $11,750, which the report puts at a maximum of $37,250 in total contributions for that group — $25,500 in regular deferrals plus the $11,750 enhanced catch-up.

The $1,000 deferral increase is the second consecutive annual increase of that size. The limit went from $23,000 in 2024 to $23,500 in 2025, then to $24,500 in 2026. The limit is indexed to the Consumer Price Index for All Urban Consumers, and the 2027 figures reflect the index change from the third quarter of 2025 to the third quarter of 2026, measured after the Bureau of Labor Statistics released September CPI data last week.

Plan sponsors and their advisers have operational work to do: coordinating with payroll providers and recordkeepers to update contribution thresholds, reviewing plan provisions governing catch-up contributions, and preparing communications that explain the higher savings opportunities. Milliman's Nina Lantz, an employee benefits research director, told 401(k) Specialist: "The latest IRS limit changes are a timely reminder for plan sponsors to engage all employees on the savings opportunities available through their retirement plans." She said that includes older workers who may be able to maximize contributions and unenrolled workers who could benefit from getting started.

The forecast also projects the SECURE 2.0 Roth catch-up wage threshold at $155,000 for 2027. Participants whose prior-year wages exceed that threshold would generally have to make catch-up contributions on a Roth basis. RCD reported in September that the IRS put required amendments on a rolling clock tied to the annual Required Amendment List, pushing Roth catch-up amendment adoption to 2029, with optional amendments keeping the 2026 date.