If you have read anything this summer about next year's contribution limits, you have probably seen two numbers: a $25,000 401(k) deferral limit for 2027, and an age-50 catch-up frozen at $8,000. Both are real projections. Both are also from March.
Milliman publishes its IRS limits forecast monthly, updating it as Consumer Price Index data arrives. The July forecast — the most recent — projects the 2027 deferral limit at $25,500 and the age-50 catch-up at $8,500. For a saver over 50, that is $1,500 more than the figure still circulating in recycled coverage.
What Changed Between March and July
The March forecast assumed CPI would run about 3.3% through September 30, 2026. Then actual inflation came in hotter. By May 31, trailing 12-month CPI measured 4.2% — enough to push both the deferral limit and the catch-up across their next rounding thresholds. The May forecast moved to $25,500 and $8,500, and the June ($3.5% CPI) and July (3.4% CPI) forecasts have held there since.
That threshold mechanic explains the confusing "frozen catch-up" story. These limits do not rise smoothly with inflation — they are indexed and then rounded down to set increments, $500 for both the deferral and catch-up figures. In March, modeled inflation left the catch-up just short of its next $500 boundary, so it appeared to stay flat at $8,000 while the deferral rose. Three months of higher CPI carried it over. Nothing was "frozen"; it was sitting near a line.
The Full July Projection
| Limit | 2026 | 2027 projected |
|---|---|---|
| 401(k)/403(b)/457 deferral | $24,500 | $25,500 |
| Age-50 catch-up | $8,000 | $8,500 |
| Super catch-up, ages 60–63 | $11,250 | $11,750 |
| Annual additions, §415(c) | $72,000 | $75,000 |
| Compensation limit | $360,000 | $375,000 |
| HCE threshold | $160,000 | $170,000 |
A 50-year-old maxing out would go from $32,500 to $34,000. Someone aged 60–63 using the super catch-up would go from $35,750 to $37,250.
Practical Takeaways
- Do not set January payroll elections off a projection. The IRS confirms official 2027 limits in late October or early November 2026, after September CPI is final. One more inflation surprise can still move a figure across a rounding line in either direction.
- Check the vintage before you trust the number. Any 2027 limits article should say which month's CPI it used. If it does not, assume it is stale — this year's forecast has already moved once.
- If you elect a flat dollar amount, plan to revisit it. Savers who set a percentage of pay adjust automatically. Those who elect a fixed amount are the ones who quietly under-contribute after a limit increase.
- Over 50 and earning above roughly $150,000? Your catch-up must go to a Roth 401(k) in after-tax dollars under SECURE 2.0. A larger catch-up means a larger current-year tax bill, not a larger deduction — budget for it.
- Watch the HCE and compensation lines too. A jump to $170,000 changes who is tested as highly compensated, which can affect how much certain employees are permitted to defer at all.
The direction of travel is not in doubt — limits are rising. The precise amount is, and it will stay uncertain for roughly two more months. That is a good reason to plan around the increase and a poor reason to commit to a specific dollar figure before the IRS publishes one.
Sources: Milliman – 2027 IRS Limits Forecast, July; Milliman – 2027 IRS Limits Forecast, June; Milliman – 2027 IRS Limits Forecast, May; Milliman – 2027 IRS Limits Forecast, March; 401(k) Specialist – 2027 401(k) Contribution Limit Projected to Hit $25,000