Did you get a late start saving for retirement, skimp on contributions early in your career, or just want to further increase your retirement balance? If so, the catch-up contribution option is designed to help you.
A catch-up contribution is available for individuals who are the age of 50 or over. This gives them the opportunity to increase the amount they are saving as their retirement draws near. Catch-up contributions are possible in 401(k), 403(b), 457 plans, and IRAs but the rules differ among plans.
In the case of 401(k) plans, a catch-up contribution is any elective deferral made by an eligible participant that is in excess of the statutory limit of $18,000 in 2017. The maximum amount someone can contribute as a catch-up contribution in 2017 is $6,000.
Plan participants who are or will be 50 years of age during the calendar year are eligible to make catch-up contributions. Catch-up contributions must be made by payroll deductions only.
Saving for retirement is one of the most important things people can do for their future, however many of us don’t have enough saved for what may actually be needed in retirement. As we get older our earnings may increase and hopefully some of our expenses go down such as, no home or car payments, and the kids are living on their own. This should allow for additional discretionary income that we can invest leading up to retirement. It’s never too late to start.
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