This is an update to the Milliman 2027 IRS Limits Forecast using the U.S. Bureau of Labor Statistics (BLS) report published August 12, 2026.
Our initial forecast in March 2026 can be found here. It includes information about the limits for qualified retirement plans, how these limits are calculated, and why they may be relevant for certain plan sponsors.
July 2026 forecast
Our limits forecast is projected using two assumption sets. One set is based on the current trailing 12 months of the Consumer Price Index (CPI), and the second assumes that year-to-date CPI (since September 30, 2025) will continue to increase each month through September 30, 2026, by an estimated 25 basis points (3.0% annual).
Historical rolling 12-month changes in the CPI as of each September 30 through 2025, and the current trailing 12-month change through July 31 of the current federal fiscal year (FFY), are shown in Figure 1.
Figure 1: Historical 12-month percentage change each September 30 and current trailing 12-month percentage change through July 31, Consumer Price Index, all items, not seasonally adjusted
Source: U.S. Bureau of Labor Statistics.
The CPI as reported by the BLS for the 12 months ended July 31, 2026, was 3.4%, down from 3.5% for the 12 months ended June 30, 2026; this remains higher, however, than the 3.0% annual change in the CPI as of September 30, 2025 (i.e., the close of the prior FFY). It is also higher than the 3.2% average annual change over the past 10 years ended September 30, 2025, and higher than the 2.5% average annual change over the past 20 years ended September 30, 2025.
Since September 30, 2025, the CPI has increased about 2.8%. Projecting monthly increases of 0.25% through September 2026 results in an estimated annual increase factor of 3.3% for our 10-month actual/2-month forecast projection.
Figure 2 shows the limits forecasted under both assumption sets. Values that changed from the June forecast are in bold.
As previously noted, one of our projection scenarios assumes that CPI increases 0.25% per month through September (i.e., about 0.50% for the next two months). To gauge how sensitive our projected limits are, we calculated the smallest CPI change for August and September 2026 that would cause the estimated compensation limit to move up or down relative to this July forecast. The results are shown below (using the IRS rounding rules).
| Change in CPI for August through September 2026 | Change in estimated 2027 IRS compensation and contributions limits |
|---|---|
| Increase of about 1.14% per month, i.e., about 2.30% for two months |
Compared to this July forecast: • A $5,000 increase in the compensation limit • A $1,000 increase in the maximum annual addition for defined contribution (DC) plans |
| Decrease of about 0.18% per month, i.e., about 0.37% for two months | Compared to this July forecast: • A $5,000 decrease in the compensation limit • A $500 decrease in the maximum §401(k), §403(b), §457 deferral for DC plans • A $1,000 decrease in the maximum annual addition for DC plans • A $500 decrease in the age 50+ catch-up contribution limit |
The BLS is expected to release the August CPI results on September 11, 2026, at which time this forecast will be updated.
Please contact your Milliman consultant for details and questions about how these limits apply to your retirement plan(s).
Figure 2: 2027 IRS Limits Forecast using actual FFY 2026 CPI as of July 31, 2026
| Category of annual IRS limits | 2026 IRS limits | Estimated 2027 IRS limits | Dollar increases from 2026 limit | ||
|---|---|---|---|---|---|
| Actual 12-month trailing CPI as of 7/31/2026 | 10-month actual 7/31/2026, 2 months forecast to 9/30/2026 | Actual 12-month trailing CPI as of 7/31/2026 | 10-month actual 7/31/2026, 2 months forecast to 9/30/2026 | ||
| Maximum annual annuity pension for DB plans | $290,000 | $300,000 | $300,000 | $10,000 | $10,000 |
| Maximum annual addition for DC plans | $72,000 | $75,000 | $75,000 | $3,000 | $3,000 |
| Maximum §401(k), §403(b), §457 deferral for DC plans | $24,500 | $25,500 | $25,500 | $1,000 | $1,000 |
| Catch-up contribution limit for DC plans | $8,000 Ages 60 to 63: $11,250 |
$8,500 Ages 60 to 63: $11,750 |
$8,500 Ages 60 to 63: $11,750 |
$500 $500 |
$500 $500 |
| Compensation limit | $360,000 | $375,000 | $375,000 | $15,000 | $15,000 |
| HCE dollar amount | $160,000 | $170,000 | $170,000 | $10,000 | $10,000 |
| Key employee/officer compensation | $235,000 | $240,000 | $240,000 | $5,000 | $5,000 |
| Contribution limit to ESAs for DC plans | $2,600 | $2,700 | $2,700 | $100 | $100 |
| Prior-year wage threshold triggering Roth catch-up contributions to DC plans | $150,000 | $155,000 | $155,000 | $5,000 | $5,000 |
| Domestic abuse withdrawal limit | $10,500 | $10,900 | $10,900 | $400 | $400 |
Source: https://www.bls.gov/cpi/ retrieved August 12, 2026.
Actual 12-month trailing CPI for All Urban Consumers (CPI-U) of 3.4% ending July 31, 2026.
Actual 10-month CPI-U ending July 31, 2026, and 0.25% per month for August and September 2026.