# Solo 401(k) limits for 2027: what the new forecasts show

By James Ustby, CFP®, APMA®. Published 2026-10-21. Canonical URL: https://jamesustby.com/articles/solo-401k-limits-2027-forecast

> September inflation data points to a $75,000 solo 401(k) limit for 2027, up from $72,000. Here is what that could mean for an owner, with the math.

## Key takeaways

- The Bureau of Labor Statistics released September inflation data on October 14, 2026, the last input the IRS uses to set the 2027 retirement plan limits.
- Marsh and Milliman now both project a 2027 elective deferral limit of $25,500 and an overall defined contribution limit of $75,000, up from $24,500 and $72,000 in 2026. These are forecasts, not IRS figures.
- In a solo 401(k), an owner can contribute as both employee and employer, so the overall limit, not the deferral limit, is usually the number that matters.
- In our hypothetical, a 61 year old S corporation owner paid $300,000 in salary could put in $83,250 for 2026 and, if the forecasts hold, $86,750 for 2027.
- Owners whose prior year wages from the business were over $150,000 generally must make catch-up contributions as Roth starting in 2026.

## The short answer

On October 14, 2026, the Bureau of Labor Statistics published September inflation data, the last input for next year's retirement plan limits. Within days, Marsh and Milliman both projected that the overall solo 401(k) limit will rise from $72,000 in 2026 to $75,000 in 2027, with the employee deferral limit going from $24,500 to $25,500. The IRS has not confirmed these numbers yet, but owners who set payroll and contribution plans for January can start with the 2026 figures that are final and treat 2027 as a likely range.

## What happened this week?

Each year the IRS adjusts retirement plan limits for inflation, using the Consumer Price Index from the third quarter of the prior year to the third quarter of the current year. The September 2026 report showed prices up 3.7 percent over 12 months, a faster pace than the year before.

With that final data point in hand, Marsh updated its projections on October 15, and 401(k) Specialist reported on October 20 that Milliman's final forecast matches Marsh's exactly. The IRS usually publishes the official limits in late October or November. For 2026 it did so on November 13, 2025, in Notice 2025-67.

Here are the limits that matter most to an owner with a solo 401(k).

| Limit | 2026 (IRS, final) | 2027 (projected) |
|---|---|---|
| Employee elective deferral | $24,500 | $25,500 |
| Catch-up, age 50 and over | $8,000 | $8,500 |
| Catch-up, ages 60 to 63 | $11,250 | $11,750 |
| Overall defined contribution limit | $72,000 | $75,000 |
| Compensation that can be counted | $360,000 | $375,000 |
| Prior year wages that trigger Roth catch-up | $150,000 | $155,000 |

The 2026 column comes from IRS Notice 2025-67. The 2027 column is the Marsh projection, which Milliman's forecast matches. Projections like these can miss by a rounding step, so treat the 2027 column as an estimate until the IRS notice is out.

## How does a solo 401(k) contribution work?

A solo 401(k) is a regular 401(k) that covers a business owner with no employees, or the owner and a spouse. The IRS describes the owner as wearing two hats.

- **As the employee**, the owner can defer up to 100 percent of compensation, up to the elective deferral limit.
- **As the employer**, the business can add a nonelective contribution of up to 25 percent of compensation as the plan defines it. For a sole proprietor or partner, compensation is net earnings from self-employment after half of the self-employment tax and the contribution itself, which works out to a lower effective rate. IRS Publication 560 has the worksheet.
- **The two together** cannot pass the overall limit, $72,000 for 2026. Catch-up contributions for owners 50 and over sit on top of that limit.

That last point is why the overall limit usually matters more than the deferral limit for a well-paid owner. Once salary is high enough, the employer piece fills whatever room the deferral leaves.

## What could this mean for one owner? (hypothetical example)

Meet Dana, a hypothetical example. She is 61, the only employee of her S corporation, and pays herself a $300,000 salary. She has no other 401(k) at another job. Her S corporation salary is her compensation for plan purposes, so the 25 percent employer limit is $75,000, more than enough to reach the overall limit in both years.

| Dana's solo 401(k) | 2026 (final limits) | 2027 (projected limits) |
|---|---|---|
| Elective deferral | $24,500 | $25,500 |
| Employer contribution needed to reach the overall limit | $47,500 | $49,500 |
| Subtotal (overall limit) | $72,000 | $75,000 |
| Age 60 to 63 catch-up | $11,250 | $11,750 |
| Total that could go in | $83,250 | $86,750 |

In this example, the projected 2027 limits would let $3,500 more go into Dana's plan than in 2026. If Dana were 55 instead of 61, her catch-up would be $8,000 for 2026 and a projected $8,500 for 2027, for totals of $80,000 and $83,500. She turns 64 in 2029, and the larger catch-up generally ends for the year she turns 64, so the 60 to 63 window is a fixed number of years.

Whether filling the plan makes sense depends on her cash flow, her other savings and her tax picture, which this example does not cover. The free [owner retirement plan calculator](https://jamesustby.com/owner-retirement-plan-calculator) lets you run your own salary and age through the same 2026 limits.

## Should catch-up contributions be Roth now?

For many owners, that is no longer a choice. Starting in 2026, an employee whose Social Security wages from the employer sponsoring the plan were more than $150,000 in the prior year generally must make catch-up contributions as Roth contributions. Dana paid herself $300,000 in 2025, so her 2026 catch-up would generally have to be Roth, and her plan must offer a Roth option for her to make one at all.

The projected 2027 trigger is $155,000 of 2026 wages. A sole proprietor or partner who has no W-2 wages from the business is generally not subject to this rule, because the test looks at Social Security wages from the employer. The rule is new enough that the plan document and your tax professional should confirm how it applies to your setup.

## What should an owner check before January?

None of these limits require action today, but a few dates and decisions tend to sneak up on owners at year end.

1. **Payroll elections.** An S corporation owner's elective deferrals generally come out of payroll during the year. If you plan to raise your deferral in 2027, the payroll change has to be in place for January paychecks.
2. **Employer contribution timing.** Employer contributions for a year can generally be made up to the business's tax filing deadline, including extensions. Publication 560 covers the rules for each plan type.
3. **The second job trap.** Elective deferral limits apply per person, not per plan. An owner who also defers into another employer's 401(k) has to count both.
4. **A sale on the horizon.** If you expect to sell the business, the plan has to be dealt with as part of the deal, and the last years before a sale can be high-income years when contribution room is worth reviewing. Our [exit planning timeline](https://jamesustby.com/articles/exit-planning-business-owner-start) covers how far ahead those decisions usually start.

North Carolina note: North Carolina generally follows the federal treatment of 401(k) deferrals, and its individual income tax is currently a single flat rate, so the state piece of the pre-tax versus Roth question is simpler here than in states with graduated rates.

## The bottom line

The September inflation report locked in the inputs for 2027, and two major forecasters agree the overall solo 401(k) limit is likely to rise to $75,000, with a $25,500 deferral limit. The 2026 limits are final: $24,500, $72,000 overall, and catch-ups of $8,000 or $11,250 depending on age. In our hypothetical, an S corporation owner aged 61 with a $300,000 salary could put in $83,250 for 2026 and a projected $86,750 for 2027. For owners with prior year wages over $150,000, catch-up contributions generally have to be Roth now. The official 2027 numbers should arrive within weeks.

Do you know your 2026 compensation for plan purposes, and how much room is left in your plan before December 31?

## Next steps if you own a business

- **Get the next one by email.** [The Liquidity Letter](#ll-foot-title) covers exits, cash and taxes for owners with millions on the line. Sign up in the box at the bottom of this page.
- **Use the free reader resources.** The [Before You Sell resources](https://jamesustby.com/before-you-sell-resources) include printable worksheets and a table of 2025 and 2026 retirement plan limits.
- **Talk it through.** If you want to see how a plan could fit your company and your exit timeline, [book a free call](https://oncehub.com/jamesustby).

## Questions people ask next

### When will the IRS announce the 2027 limits?

The IRS usually announces the next year's retirement plan limits in late October or November. The 2026 limits came out on November 13, 2025, in Notice 2025-67. Until the IRS publishes its notice, any 2027 number is a projection.

### Does the overall limit include catch-up contributions?

No. The overall defined contribution limit ($72,000 for 2026) covers elective deferrals and employer contributions. Catch-up contributions for people 50 and over are added on top of it.

### Who is subject to the Roth catch-up rule?

Starting in 2026, an employee whose Social Security wages from the employer sponsoring the plan were over $150,000 in the prior year generally must make any catch-up contributions as Roth. A sole proprietor or partner without W-2 wages from the business is generally not subject to it, but the plan document and your tax professional should confirm.

### What if I hire employees?

A solo 401(k) is meant for an owner with no employees other than a spouse. Once eligible employees join, the plan must cover them and the testing rules apply, unless it is set up as a safe harbor plan or another design that is exempt.

## Sources

- [U.S. Bureau of Labor Statistics, Consumer Price Index, September 2026 (released October 14, 2026)](https://www.bls.gov/news.release/cpi.nr0.htm)
- [Marsh People and Investments, Marsh projects 2027 retirement plan limits (updated October 15, 2026)](https://www.mercer.com/en-us/insights/law-and-policy/marsh-projects-2027-retirement-plan-limits/)
- [401(k) Specialist, 2027 401(k) contribution limits all but official (October 20, 2026)](https://401kspecialistmag.com/2027-401k-contribution-limits-all-but-official-25500-expected/)
- [IRS, Notice 2025-67, 2026 amounts relating to retirement plans and IRAs](https://www.irs.gov/pub/irs-drop/n-25-67.pdf)
- [IRS, IR-2025-111, 401(k) limit increases to $24,500 for 2026](https://www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500)
- [IRS, One-participant 401(k) plans](https://www.irs.gov/retirement-plans/one-participant-401k-plans)
- [IRS, COLA increases for dollar limitations on benefits and contributions](https://www.irs.gov/retirement-plans/cola-increases-for-dollar-limitations-on-benefits-and-contributions)
- [IRS, Publication 560, Retirement Plans for Small Business](https://www.irs.gov/publications/p560)

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Author: James Ustby, CFP®, APMA®, Wealth Advisor, LPL Financial, Durham and Chapel Hill, North Carolina. This material is for general information only and is not intended to provide specific advice or recommendations for any individual. Examples are hypothetical and for illustration only. Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA / SIPC. Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP® and CERTIFIED FINANCIAL PLANNER® in the United States to Certified Financial Planner Board of Standards, Inc., which authorizes individuals who successfully complete the organization’s initial and ongoing certification requirements to use the certification marks.