Saving for retirement is not a one-size-fits-all strategy, and varies on workplace benefits packages, salary, budgeting, and more. Knowing there is no traditional path for savings, the Internal Revenue Service (IRS) introduced 401(k) catch-up contributions for people over the age of 50 to help them amplify their retirement savings in the decade leading up to retirement.
Employees can make catch-up contributions to a variety of retirement plans, including traditional and Roth IRAs, 401(k) plans, SIMPLE IRAs, and Simplified Employee Pension (SEP) plans. While the terms for each vary on an annual basis, this loophole gives soon-to-be retirees a chance to put their money to work to maximize their savings for the golden years.
Read below to learn more about utilizing catch-up contributions for retirement planning.
Eligibility
When it comes to making catch-up contributions, there are eligibility requirements outside of the 50-year age minimum.
Plan participants utilizing catch-up contributions have a contribution limit, just like every other retirement savings account. These limits are reviewed and updated annually by the IRS. More details can be found in the section below.
In addition, participants cannot make contributions that exceed their annual compensation over elective deferral contributions, as noted by Investopedia.
Eligibility varies by plan, so it’s important to speak with your company’s HR or benefits specialist to understand the rules and regulations associated with your account. For example, some employers may require a minimum employment history before allowing employees to utilize catch-up contributions. Understanding your plan is important as you start to prepare for retirement in the coming decade.
Contribution Limits
Every year, the IRS determines contribution limits for retirement plans as a way to account for inflation, the cost of living, and other economic factors. In 2025, the plan limits increased as follows:
- 401(k), 401(b), and 457 Plans: $23,500, up from $23,000 in 2024.
- Traditional and Roth IRAs: Contribution maximums vary by income.
For participants over 50 years old who want to contribute additional funds to their plans under the catch-up contribution policy, the limits are as follows:
- 401(k), 401(b), and 457 Plans: An additional $7,500 can be contributed. If you are age 60-63, you can contribute up to $11,250
In 2022, amendments were made to the SECURE Act 2.0 that will impact participants beginning in 2026. Participants will be divided into two groups determined by their annual income, summarized from Charles Schwab below.
- Participants making more than $145,000 will have to make catch-up contributions with after-tax dollars into a Roth IRA. While the tax deduction will be lost, withdrawals made in retirement will be tax-free.
- Participants making less than $145,000 annually can continue making catch-up contributions to their regular pre-tax 401(k) plans.
Until 2026, participants over the age of 50 can continue making catch-up contributions as normal but should consult with their employer about the changes to come.
Catch-up contributions are a great way for participants over 50 to save additional funds for the future and can make a difference in your retirement lifestyle. View Slavic401k’s retirement nest egg calculator to forecast your retirement savings and contribution needs. In addition, you can use Slavic401k’s retirement contributions effects calculator to determine how contributing additional funds to your retirement plans may impact your paycheck.
Remember, there is no one-size-fits-all retirement savings strategy, and how you save for the future depends on your income, benefits package, cost of living, and a variety of other factors.
To work through a detailed retirement plan, meet with a certified financial advisor to create a plan that works for you, and remember – your strategy will continue to evolve throughout the years, so revisit it regularly and adjust when necessary.
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