Set Your 2027 401(k) Contribution in Your 40s

The 2027 401(k) limit is not official yet. Milliman, a benefits consulting firm, projects $25,500, up from $24,500 in 2026. The IRS usually confirms the number in late October or November. Set your 2027 contribution as a percentage of pay now, rather than waiting for the final dollar figure.

Every October, the same question lands in my inbox. Open enrollment starts, a form asks for your 2027 401(k) contribution, and nobody can tell you the official limit. This guide is for people in their 40s who have to pick a number this month. It covers the projected limit, when the real one arrives, how much to save, and a simple way to choose a percentage you will not have to redo.

What Will the 2027 401(k) Limit Be?

Benefits consulting firm Milliman projects the 2027 limit at $25,500. That would be a $1,000 increase from $24,500 in 2026. The figure is a forecast, not law. A weak September inflation reading could hold the limit at $25,000 instead, so treat $25,500 as the likely number and $25,000 as the floor.

The projection comes from Milliman's August 2027 IRS limits forecast. It uses actual inflation data through August 2026 and assumes a small rise in September. Under that assumption, the catch-up limit for workers 50 and older also climbs, from $8,000 to $8,500. Milliman warns that if the September price increase is below 0.04%, both numbers could stay where they are or rise by only $500.

Why does inflation drive the limit? The IRS adjusts the 401(k) cap each year using the Consumer Price Index, which tracks what households pay for everyday goods. Higher prices mean a higher cap. The formula rounds in set steps, which is why the forecast jumps between $25,000 and $25,500 rather than landing on an odd number.

I spent years administering a 401(k) plan for a regional employer, and I watched people freeze over this exact moment. They waited for the final number, missed the enrollment window, and walked into January with last year's election. A forecast is good enough to act on. The cap is a ceiling, and most people never come near it.

When Does the IRS Announce the Real Number?

The IRS usually announces next year's retirement limits in late October or early November. It waits for the September Consumer Price Index, which the Bureau of Labor Statistics (BLS) releases on October 14 this year. Timing can slip, though. Last year's announcement came on November 13 after a federal government shutdown delayed it.

The trade publication 401(k) Specialist reports that the final 2027 limits follow shortly after the September inflation data. That puts the likely announcement window in the last two weeks of October or the first half of November. Expect a press release from the IRS and a technical notice with every dollar limit for the year.

Last year gives you a useful reference point. The IRS raised the 2026 401(k) limit to $24,500 from $23,500 for 2025. It also lifted the IRA limit to $7,500 from $7,000. Both moves were announced in mid-November, after many employers had already opened enrollment.

That gap is the real problem. Many plans close open enrollment before the IRS speaks. Your employer's payroll system will not wait for a federal press release, and neither should you. If you pick a percentage today, the announcement becomes a footnote instead of a deadline.

How Much of Your Paycheck Should Go In During Your 40s?

Aim for 12% to 15% of your income, counting any employer match. Vanguard uses that range as its savings target in its annual How America Saves report. On a $100,000 salary, that is $12,000 to $15,000 a year, and your employer's match covers part of it.

The Vanguard How America Saves 2026 report shows how far typical savers sit from that target. Participants deferred an average of 7.6% of pay in 2025, with a median of 6.6%. Add employer money, and the average total contribution reached 12.1%.

Balances tell a similar story. The average account held $167,970 at the end of 2025, but the median was only $44,115. A handful of large accounts pull the average up. If your balance looks small next to the average, compare it with the median instead.

Here is a number most people never run. Say you earn $90,000. The 2027 limit of $25,500 would equal about 28% of your pay. A 10% election is $9,000 a year. Your real constraint is your cash flow, not the IRS cap, so a percentage of pay is the right way to think about it.

There are exceptions. If you started saving late, 15% may not be enough, and the catch-up rules at age 50 become valuable. If you carry credit card debt at 22% interest, paying it down can beat the last few points of savings. Get the full employer match first, then decide where the next dollar does the most good.

How Do You Set a Percentage Before the Number Is Official?

Pick a percentage of pay, not a dollar amount. Start with your current rate, add one point, and make sure you collect your full employer match. A percentage follows your pay through raises, and for most people it stays far below the IRS cap.

Follow these five steps before your enrollment window closes:

Turning 50 in 2027 changes the math. Workers 50 and older can add a catch-up contribution on top of the standard limit. For 2026, the IRS lists the catch-up at $8,000 and a higher $11,250 for ages 60 through 63 in IRS Notice 2025-67, which spells out every 2026 retirement dollar limit. Milliman projects $8,500 for 2027.

In my experience, the one-point bump is the step people skip. It feels small, so they put it off. Yet a one-point raise on a $90,000 salary adds $900 a year, and compounding does the rest. Do it now, while the form is open and the decision is easy.

A quick word on Roth versus traditional money. A traditional contribution lowers your taxable income today, while a Roth contribution is taxed now and grows tax free. If you are in your peak earning years and expect a lower bracket in retirement, traditional often wins. If you expect higher taxes later, Roth deserves a share. Splitting the difference is a reasonable choice, and both count toward the same annual limit.

What If the Limit Comes in Lower Than Expected?

Nothing breaks. A $25,000 limit instead of $25,500 only matters if you plan to contribute the maximum. Most people in their 40s save well below the cap, so a $500 difference changes nothing about their election. If you do plan to max out, spread the lower amount across the year.

The paycheck math is simple. Spread over 26 biweekly paychecks, $25,500 is about $981 per check. A $25,000 limit is about $962 per check. The gap is under $20 a paycheck, which is easy to absorb.

If you aim for the cap, avoid front-loading. Some plans match contributions paycheck by paycheck. If you hit the limit in October, your match can stop for the rest of the year, and you leave free money on the table. Ask your plan administrator whether it offers a true-up, which makes up the missed match at year end.

One more caution applies if you change jobs. The limit belongs to you, not to a single plan. If you contribute at two employers in the same year, the combined total must stay under the cap. Keep your last pay stub from the old job so you can add the numbers.

The Bottom Line on Your 2027 401(k) Contribution

The practical answer is simple. Treat $25,500 as the likely 2027 limit, pick a percentage you can sustain, and aim for 12% to 15% of income including the match. If you are short of that range, add a point this enrollment season and another next year. Then check the IRS announcement in November and adjust only if you plan to contribute the maximum.

Your next step takes about ten minutes. Pull up your pay stub, read your match formula, and update your election before your window closes. At Simply Forties, we think the best money move in your 40s is usually the boring one you finish. This is one of them.

Fact-checked as of October 7, 2026. Projected figures may change when the IRS publishes its official 2027 limits. This article is general education, not personalized financial advice.

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