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Defined contribution plan IRA IRS

IRS Releases 2027 COLA Retirement Savings Limitations

The Internal Revenue Service (IRS) has issued Notice 2026-66, which contains the 2027 cost-of-living increases for qualified retirement plan dollar limitations on benefits and contributions under the Internal Revenue Code (IRC).

  • Annual additions under IRC Section (Sec.) 415(c)(1)(A) for defined contribution plans: $75,000 ($72,000 for 2026)

  • Annual benefits under IRC Sec. 415(b)(1)(A) for defined benefit plans: $300,000 ($290,000 for 2026)

  • Annual deferral limit (402(g) limit) for 401(k), 403(b), and 457(b) plans: $25,500 ($24,500 for 2026)

  • Catch-up contributions to 401(k), 403(b), and 457(b) plans: $8,500 ($8,000 for 2026)

  • Age 60-63 Catch-up contributions to 401(k), 403(b), and 457(b) plans: $11,750 ($11,250 for 2026)

  • Wage Threshold for Roth catch-up contributions: $155,000 for 2026, which is used to determine highly paid individual status for 2027. ($150,000 for 2025, used to determine highly paid individual status for 2026)

  • Annual deferral limit for SIMPLE IRA and SIMPLE 401(k) plans: $17,500 ($17,000 for 2026)

  • Catch-up contributions for SIMPLE IRA and SIMPLE 401(k) plans: remains $4,000 ($4,000 for 2026)

  • Age 60-63 Catch-up contributions for SIMPLE IRA and SIMPLE 401(k) plans: remains $5,250 ($5,250 for 2026)

  • 110% Deferral limit for Certain SIMPLE plans: $19,100 ($18,100 for 2026)

  • 110% Catch-up limit for Certain SIMPLE plans: remains $3,850 ($3,850 for 2026)

  • IRC Sec. 401(a)(17) compensation cap: $375,000 ($360,000 for 2026)

  • Highly compensated employee (HCE) definition income threshold: $170,000 for 2027 ($160,000 for 2026)

  • Top-heavy determination key employee definition income threshold: $245,000 ($235,000 for 2026)

  • SEP plan employee income threshold for benefit eligibility: remains $800 ($800 for 2026)

  • Taxable wage base (TWB) increases to $192,300 for 2027 from $184,500; used in some integrated allocation formulas

  • Qualifying longevity annuity contract (QLAC) amount excludible from required minimum distribution determinations $220,000 ($210,000 in 2026)

  • The limitation under section 402A(e)(3)(A)(i) concerning pension-linked emergency savings accounts that may be included in certain types of defined contribution plans increased to $2,700 ($2,600 for 2026)

IRA Contribution and Taxpayer Contribution Credit Amounts

Annual limitations for IRA contributions, deductibility for those who are active participants in employer plans, and those seeking an income tax credit for retirement saving contributions, have slightly different indices that are used for determining cost-of-living adjustments (COLAs) in employer plans. The limitations for 2027 are as follows.

  • Traditional and Roth IRA contributions: remains $7,500 ($7,500 for 2026)

  • Traditional and Roth IRA catch-up contributions: remains $1,100 ($1,100 for 2026)

  • IRA deductibility phase-out for single taxpayers participating in employer plans rises to $83,000 - $93,000 (was $81,000 - $91,000)

  • IRA deductibility phase-out for married joint filing taxpayers participating in employer plans rises to $133,000 - $153,000 (was $129,000 - $149,000)

  • IRA deductibility phase-out for married with spouse an active participant in an employer plan rises to $250,000 - $260,000 (was $242,000 - $252,000)

  • Roth IRA income limitations for determining maximum contribution for married joint filers: phase-out range rises to $250,000 - $260,000 (was $242,000 - $252,000)

  • Roth IRA income limitation for determining maximum contribution for single filers and heads-of-households: phase-out range rises to $158,000 – $173,000 (was $153,000 - $168,000)

  • Taxpayers who make contributions to IRAs or deferral-type employer-sponsored retirement plans of up to $2,000 may be eligible for a special income tax credit (the “saver’s credit”) of 10, 20, or 50 percent of the amount contributed, depending on their income.

For joint filers, the maximum adjusted gross income level for

  • the 50 percent tax credit is $50,000;

  • the 20 percent tax credit is $54,000; and

  • the 10 percent tax credit is $83,000.

For head of household filing status, the maximum adjusted gross income level for

  • the 50 percent tax credit is $37,500;

  • the 20 percent tax credit is $40,500; and

  • the 10 percent tax credit is $62,250.

For all other filing statuses, the maximum adjusted gross income level for

  • the 50 percent tax credit is $25,000;

  • the 20 percent tax credit is $27,000; and

  • the 10 percent tax credit is $41,500.

Note: Effective for taxable years beginning after Dec. 31, 2026, Saver’s Match contributions under Section 6433 will replace the Saver’s Credit under Section 25B with respect to elective contributions made to qualifying retirement plans and IRAs. However, the Saver’s Credit continues to be available after Dec. 31, 2026, with respect to contributions made to ABLE accounts described in section 529A.