Catch-up contributions are additional retirement plan contributions allowed by the IRS for individuals who are age 50 or older. These higher contribution limits are designed to help older workers boost their retirement savings as they near retirement age.
Catch-Up Contributions
Definition
Catch-up contributions are additional retirement plan contributions allowed by the IRS for individuals who are age 50 or older. These higher contribution limits are designed to help older workers boost their retirement savings as they near retirement age.
Example
If the regular 401(k) contribution limit is $22,500 (2023), someone age 50 or older can contribute an additional $7,500, bringing their total possible contribution to $30,000.
Key Points
- 1Extra contributions allowed for those age 50 and over.
- 2Applies to various retirement accounts like 401(k)s, IRAs, and 403(b)s.
- 3Designed to help individuals accelerate retirement savings.
- 4Limits are adjusted periodically for inflation.
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