Milliman's latest 2027 IRS Limits Forecast projects the 401(k), 403(b), and 457 elective deferral limit will rise $1,000 to $25,500, up from $24,500 in 2026. That headline number is the least interesting part of the document. The footnote is what savers should read.
Milliman flags a condition: if the September 2026 CPI increase comes in below 0.04%, the deferral limit rises only $500 — to $25,000 — and the regular age-50 catch-up stays at $8,000 instead of moving to $8,500. For a 50-year-old saver maxing out, those two outcomes differ by $1,000 of tax-advantaged space.
Four one-hundredths of one percent, in a single month, is the whole margin.
Why a Rounding Rule, Not Inflation, Decides It
The deferral limit is not re-derived from scratch each year. Under 26 U.S.C. § 402(g)(4), the base dollar amount is indexed to a fixed base period — the calendar quarter beginning July 1, 2005 — and then "any increase under this paragraph which is not a multiple of $500 shall be rounded to the next lowest multiple of $500."
That makes the limit a step function, not a smooth curve. The cumulative index since 2005 either clears the next $500 rung or it doesn't. In a year where the unrounded figure sits just under a rung, a rounding error's worth of September CPI determines whether savers get one step or two — and the leftover fraction is not banked, it simply carries into next year's cumulative calculation.
What Milliman Actually Projects
As of the forecast, Milliman's central case assumes a 0.25% monthly increase for September 2026, producing an estimated annual increase factor of 3.4% — comfortably above the 0.04% trigger. The base case projections:
- 402(g) elective deferral: $25,500 (from $24,500)
- Age-50 catch-up: $8,500 (from $8,000)
- Ages 60–63 "super" catch-up: $11,750 (from $11,250)
- 415(c) annual additions: $75,000 (from $72,000)
- 401(a)(17) compensation limit: $375,000 (from $360,000)
- Emergency savings account: $2,700 (from $2,600)
- Key employee / officer compensation: $240,000 — or $245,000 if September CPI exceeds 0.35%
Note that the cliff cuts both ways: there is a low-side trigger at 0.04% and a high-side trigger at 0.35%, and the central estimate of 0.25% sits between them.
The Calendar
BLS releases September CPI on Wednesday, October 14, at 8:30 a.m. Eastern — the same print that fixes the 2027 Social Security COLA. The IRS then publishes official limits in its annual § 415(d) notice, historically in late October or early November. Until that notice lands, every figure above is a projection.
Practical Takeaways
Do not set a 2027 per-paycheck dollar election off a forecast. If you contribute a flat dollar amount calibrated to hit the annual max, a $500 overestimate across 24 pay periods is roughly $21 per check of excess deferral risk. Either elect a percentage of pay, or budget against the conservative $25,000 figure and true up in Q4 2027 once the real limit is confirmed.
If you turn 50 in 2027, the catch-up is the volatile piece. The $8,000-versus-$8,500 question is live in a way the base limit mostly isn't.
If you turn 60, 61, 62, or 63 in 2027, the projected $11,750 super catch-up is the larger planning variable — and it is available only in those four calendar years.
Plan sponsors: hold payroll-system updates and participant communications until the IRS notice. Restating a limit twice in one open-enrollment season is how wrong elections get locked in.
Sources: Milliman — 2027 IRS Limits Forecast (August 2026 edition); 401(k) Specialist — "2027 401(k) Contribution Limit Forecast at $25,500: Milliman" (September 14, 2026); 26 U.S.C. § 402(g)(4), Cornell Legal Information Institute; U.S. Bureau of Labor Statistics — Schedule of Selected Releases, 2026; The Motley Fool — "The 2027 Social Security COLA Will Be Announced on Oct. 14."