As you get closer to retirement, you may feel the need to accelerate your savings. Fortunately, an IRS provision allows individuals 50 and older to make additional “catch-up contributions” to their retirement accounts beyond the standard limits.
This provision can be a game-changer for those who may have started saving later in life or who want to maximize their savings opportunities in the final years of their career.
The IRS catch-up provision offers a valuable tool for anyone age 50 and older to make additional contributions to their retirement accounts beyond the standard limits
In 2024, the IRS permits individuals over 50 to contribute:1
- An additional $7,500 to 401(k), 403(b), and most 457 plans, as well as the federal government's Thrift Savings Plan.
- An additional $3,500 to SIMPLE plans.
- An additional $1,000 to individual retirement accounts (IRAs).
Catch-up contributions can be advantageous for a number of reasons.
- Your income may be higher: Take advantage of your potentially higher income level at the end of your career by making additional contributions to your retirement account when you can better afford it.
- Flexibility for late starters: If you started saving later in life, catch-up contributions offer a chance to make up for lost time to ensure a more secure retirement.
- Tax advantages: Contributions to non-Roth 401(k)s, 403(b)s and IRAs offer tax benefits by reducing your taxable income for the year, which potentially lowers your tax bracket and overall tax liability.
For more detailed information, visit IRS.gov. A financial professional can help you make informed decisions about your financial future.
