For individuals aged 50 and above, catch-up contributions offer a unique opportunity to save additional money for their retirement on a tax-advantaged basis. The increase is designed for the saver who may have gotten a late start on their retirement savings or encountered circumstances that delayed their contributions. The additional savings allow them to “catch up” and bridge the gap.
In 2023, the catch-up contribution limit is 2023, which is in addition to the annual contribution limit of $22,500.
Your eligibility for catch-up contributions begins in the calendar year you turn 50 — not once you actually turn age 50 — which means that individuals with late-year birthdays can max out their contributions before hitting the half-century mark. If, for example, you turn 50 in July next year, you are eligible for catch-up contributions beginning on January 1st of that year. Note, that you will not need to make a separate contribution election in your account at Jocelyn Pension Consulting. When entering your contribution rate, simply include the catch-up contribution amount as part of the total you choose to defer from each pay period.
Eligible individuals can take advantage of a 401(k) catch-up every year, provided they meet the Plan’s contribution requirements. Once an individual has hit their annual contribution limit, they are not eligible for another catch-up contribution until the following year.