The 401(k) limit rises to $25.5K for 2027. Your paycheck choices are due now.

About one in five workers left free money on the table this year — their employer's full 401(k) match — and the fix is due in December. The IRS just raised the 401(k) limit for 2027 to $25.5K, up from $24.5K. The limit rises on its own, but a contribution rate does not, so most workers have to log in and change it themselves.

The match comes first. About 19% of employees weren't deferring enough to receive their company's full matching contribution in the second quarter of 2026, according to a Fidelity analysis of 27.3K corporate plans. That's money an employer already agreed to pay.

Most people never get near the cap. In 2025, only 14% of participants maxed out their 401(k)s, per Vanguard's 2026 How America Saves report, which covered nearly 5M participants. The average combined savings rate, including employer deposits, was an estimated 12.1%. Vanguard suggests saving 12% to 15% of pay per year, including employer contributions, and only one-quarter of participants deferred more than 10% of earnings.

What changed for 2027

The new limit. The annual employee deferral cap for 401(k), 403(b), governmental 457 plans, and the federal Thrift Savings Plan increased to $25.5K, up from $24.5K for 2026.

Catch-up money grew too. Savers aged 50 and over can add $8.5K in 2027, up from $8K, and workers aged 60 through 63 get a higher figure of $11.75K instead. IRAs did not move: the annual limit stays at $7.5K, and the 50-plus catch-up remains $1.1K.

One rule for higher earners. Workers whose 2026 wages topped $155K must make 2027 catch-up contributions as Roth. The IRS notice puts it this way: “The Roth catch-up wage threshold for 2026, which under section 414(v)(7)(A) is used to determine whether an individual's catch-up contributions to an applicable employer plan (other than a plan described in section 408(k) or (p)) for 2027 must be designated as Roth contributions, is increased from $150,000 to $155,000.”

Smaller bumps worth grabbing. The IRS also raised the fringe limits: “the dollar limitation for voluntary employee salary reductions for contributions to health flexible spending arrangements increases to $3,500, up $100 from the prior year”, and “the maximum carryover amount is $700, an increase of $20 from tax years beginning in 2026”. Commuters get a nudge too: “the monthly limitation for the qualified transportation fringe benefit and the monthly limitation for qualified parking increases to $350, up $10 from 2026”.

Everything else moved with inflation. The tax side was settled a week earlier. On Nov. 5, the agency raised the standard deduction to $33.2K for married couples filing jointly and $16.6K for single filers, alongside new income tax brackets.

Do it in December. Anyone planning to max out for 2027 should change their savings rate in December so it's active by the first January paycheck, experts told CNBC. Payroll systems may need one or two pay periods to process the change. Some plans handle it automatically: 27% of plans auto-escalate deferrals, and 69% of those bump by 1% a year, per the Plan Sponsor Council of America.

The checklist is short. Log into your payroll portal or 401(k) site before the holidays, first set your rate high enough to capture the full employer match, then raise it toward the new $25.5K cap, and add the catch-up if you are 50 or older. The choice you make in December is the one that lands in January's paycheck.