2027 401(k) and IRA limit projection: $25,000 or $25,500, the math

A single Bureau of Labor Statistics report due in mid-August could add $500 to what employees are allowed to put in a 401(k) next year — or add nothing at all. The short answer: applying the statutory formula in 26 U.S.C. §402(g)(4) to the CPI data published through June 2026 puts the 2027 401(k) limit at $25,000, with $25,500 in play if the summer inflation reading comes in just slightly hot; the IRA limit is on track to rise to $8,000. None of this is official. The Internal Revenue Service sets the confirmed figures in a Notice each November, and the July, August and September inflation data the formula requires does not exist yet.

The 2027 picture, at a glance

Limit	2026 (official)	2027 (central projection)	Exact CPI threshold
401(k) / 403(b) / 457 elective deferral	$24,500	$25,000 (with $25,500 in play)	Q3 2026 CPI-U average ≥ 334.67 for $25,500
IRA	$7,500	$8,000	Q3 2026 CPI-U average ≥ 333.18 for $8,000
Catch-up contribution, age 50+	$8,000	$8,000 (with $8,500 in play)	Same 334.67 threshold as the 401(k) deferral

The 2026 column is confirmed, from IRS Notice 2025-67. Everything in the other two columns is this page doing arithmetic the statute prescribes, not the IRS speaking.

The law behind the number

Most coverage of these limits treats the annual increase as a mystery the IRS reveals each fall. It is not. The 401(k) elective deferral limit is indexed by a formula written directly into the tax code, at 26 U.S.C. § 402(g)(4), and the text is exact about how the adjustment works:

“the Secretary shall adjust the $15,000 amount under paragraph (1)(B) at the same time and in the same manner as under section 415(d), except that the base period shall be the calendar quarter beginning July 1, 2005, and any increase under this paragraph which is not a multiple of $500 shall be rounded to the next lowest multiple of $500.”

In practice, the IRS applies that instruction using CPI-U — the Bureau of Labor Statistics’ broad urban consumer price index, not seasonally adjusted — averaged over the third calendar quarter, July through September. The IRA limit follows the identical mechanic under a separate provision, § 219(b)(5)(C), with its own $5,000 base and a base period anchored to 2007 instead of 2005; its rounding language is just as explicit, requiring any adjusted amount that is not a multiple of $500 to round down to the next lower multiple of $500. The age-50 catch-up contribution is indexed under yet a third provision, § 414(v)(2)(C), using the same $5,000-and-2005 mechanics as the elective deferral limit itself. A separate, larger catch-up applies to savers ages 60 through 63 under SECURE 2.0; that figure sits outside this projection, and the full retirement contribution limits 2025-2026 guide covers where it currently stands.

The control: reproducing 2026, three for three

A formula is only as trustworthy as its ability to reproduce a known answer, so before projecting anything, it is worth running 2026 back through the statute and checking it against what IRS Notice 2025-67 actually set. The base-period average CPI-U for the third quarter of 2005 — July at 195.4, August at 196.4, September at 198.8 — comes to 196.867. The 2025 measurement quarter, averaging July’s 323.048, August’s 323.976 and September’s 324.800, comes to 323.941.

For the 401(k) deferral: 15,000 × (323.941 / 196.867) = $24,682, which rounds down to the next lowest multiple of $500 — $24,500. That is exactly the 2026 limit.

For the catch-up, run off the same base and the same ratio: 5,000 × (323.941 / 196.867) = $8,227, rounding down to $8,000. Exactly the 2026 catch-up.

For the IRA, swap in its own base period — the 2007 third-quarter CPI-U average of 208.235 (July 208.299, August 207.917, September 208.490) — against a $5,000 base: 5,000 × (323.941 / 208.235) = $7,778, rounding down to $7,500. Exactly the 2026 IRA limit.

Three inputs, three outputs, three exact matches against the official Notice. That is the same discipline this site applies to tracking the Social Security COLA: reproduce the confirmed prior figure with the statutory formula before trusting the formula to project the next one.

The threshold that decides 2027: 334.67

With the method validated, the only open question for 2027 is what the July-August-September 2026 average of CPI-U turns out to be. The most recent published reading, for June 2026, is 333.952 — down slightly from May’s 335.123, a dip driven by cheaper energy prices in the unadjusted data. Neither of those months is actually in the measurement window; they only hint at where the summer might land.

For the 401(k) deferral to reach the next $500 step and land at $25,500 rather than $25,000, the unrounded result has to clear 25,500, which requires the index ratio to hit 25,500 / 15,000 = 1.7 — or, solved for the index itself, 1.7 × 196.867 = 334.67. That is barely above where June already sits: roughly a 0.2% rise in the summer average over the June level would do it. A flat or falling summer index leaves the limit at $25,000.

The age-50 catch-up shares that exact same fork, for a clean reason: both provisions index off the identical 196.867 base and the identical $5,000-scaled-to-$15,000 relationship, so the ratio needed for $8,500 — 5,000 × ratio ≥ 8,500, or ratio ≥ 1.7 — is the same ratio needed for $25,500. The two limits move together. Either the Q3 average clears 334.67 and both the deferral and the catch-up step up together, to $25,500 and $8,500, or it does not and both stay put, at $25,000 and $8,000.

The IRA sits on friendlier ground. Its threshold for the next step, to $8,000, is a Q3 average of 8,000/5,000 × 208.235 = 333.18 — and June’s 333.952 already clears that bar. Barring a further slide in the index this summer, the IRA limit is on track to rise from $7,500 to $8,000. It is not locked in; June sits only 0.8 points above the line. But it is the clearly favored outcome, unlike the 401(k) fork, which is a real toss-up.

None of this lines up with how other 2027 numbers already work. The 2027 HSA contribution limits were confirmed by the IRS back in May, because HSA indexing runs on a different calendar. The 2027 Social Security wage base is likewise still a projection — though its input is the national average wage index rather than CPI, so it moves on different data. The 401(k) and IRA limits sit furthest out on that calendar: the underlying CPI-U quarter will not even finish until September 30, 2026.

The calendar: three prints before the IRS speaks

Three more CPI-U releases stand between today and a confirmed number. July’s reading is due in mid-August 2026; August’s follows in mid-September; September’s, the final data point the formula needs, lands in mid-October. Once the September figure publishes, the Q3 2026 average is fixed, and the 2027 401(k), IRA and catch-up limits can be calculated with certainty, weeks before the IRS makes anything official.

The IRS itself will not confirm anything until its own Notice, typically issued in November, the way Notice 2025-67 set the 2026 figures in November 2025. Expect the same pattern this year: a formal Revenue Procedure or Notice sometime in November 2026, restating whatever the arithmetic above will have already settled by mid-October.

This page will be updated after each of those three releases. For now, treat $25,000 for the 401(k) deferral, $8,000 for the IRA, and $8,000 for the catch-up, with $25,500 and $8,500 both riding on the same August-September data, as the central, unofficial scenario. The formula reproduces the IRS’s own 2026 numbers exactly; it has simply not been handed 2027’s real inputs yet, and only the IRS’s November Notice will make any of these figures official. See the 2027 health FSA projection for how the same kind of forecast plays out on a smaller, faster-moving cap.