What is a catch-up contribution and who is eligible?

A 401(k) catch-up contribution is an additional contribution that individuals aged 50 or older can make to their 401(k) retirement savings account on top of the regular contribution limit. This provision allows older workers to boost their retirement savings as they approach retirement age.

The IRS sets the regular contribution limit (also known as the 402(g) limit) for 401(k) plans annually. Catch-up contributions are subject to separate limits, which are also determined by the IRS. These limits can change from year to year, so it's essential to check the current IRS guidelines.

Eligibility for catch-up contributions is straightforward: if you're 50 or older by the end of the calendar year, you would be eligible to make catch-up contributions to your 401(k) plan.* This provision gives older workers the opportunity to make up for any shortfall in retirement savings and take advantage of additional tax-deferred growth opportunities before they retire.
 

*Note: Catch up contributions must be permitted as an available feature in your 401(k) plan. Most employers allow for this provision, but the specifics of your 401(k) plan can be found in your Summary Plan Description.

The information contained herein is not intended as financial, legal or tax advice, and may not be suitable as required by specific circumstances.  Please consult your financial planner, attorney and/or tax adviser as needed.