IRS Raises Retirement Contribution Limits for 2027
Good news for retirement savers! The Internal Revenue Service (IRS) has increased retirement plan contribution limits for 2027, including those for the MO Deferred Comp Plan. These higher limits give you the opportunity to save more now and potentially build more retirement income for the future.
What's Changing in 2027?
- Standard Contribution Limit: The annual limit increases to $25,500, up from $24,500 in 2026.
- Age 50 and Older Catch-Up: Employees age 50 and older can contribute an additional $8,500, bringing their annual limit to $34,000.
- Age 60–63 Catch-Up: Employees who turn 60, 61, 62 or 63 in 2027 qualify for a higher catch-up limit of $11,750, allowing total contributions of up to $37,250.
- Pre-Retirement Catch-Up: Eligible employees within three years of normal retirement age who haven't maximized contributions in previous years may contribute up to $51,000 in 2027.
Catch-up contribution limits are subject to eligibilityrequirements. The pre-retirement catch-up provision cannot be combined with theage-based catch-up provisions.
Roth Catch-Up Rule for Higher Earners
Under the SECURE 2.0 Act, employees age 50 and older who earned more than $155,000 in Social Security (FICA) wages in 2026 must make their 2027 catch-up contributions as Roth (after-tax) contributions. This threshold increased from $150,000 for 2026.
A few things to keep in mind:
- Your previous year's wages determine eligibility. The rule uses your 2026 Social Security wages from the State of Missouri, reported in Box 3 of your W-2.
- Only catch-up contributions are affected. You can still choose pre-tax or Roth contributions for the first $25,500 you save in 2027.
- Employees below the threshold have a choice. If your 2026 FICA wages were $155,000 or less, you can continue making catch-up contributions on a pre-tax or Roth basis.
Employees age 50 and over who want to contribute the maximumpre-tax amount ($25,500) and the maximum catch-up ($8,500) to Roth would needto contribute the following amounts if paid semi-monthly:
- Maximum pre-tax contribution: $25,500 → $1,062.50 per semi-monthly paycheck ($25,500 ÷ 24)
- Maximum Roth catch-up contribution: $8,500 → $354.16 per semi-monthly paycheck ($8,500 ÷ 24)
Ready to Save More?
The new limits take effect January 1, 2027. Whether you're looking to increase your contributions or simply review your savings strategy, now is a great time to take a closer look. Log in to your MO Deferred Comp account to update your contribution amount, or contact a Financial Education Professional for personalized guidance.
For additional information, review the IRS announcement.
