Catch-up Contributions (2024)

FAQs

Catch-up Contributions? ›

A catch-up contribution is an elective deferral made by a participant age 50 or older that exceeds a statutory limit, a plan-imposed limit, or the actual deferral percentage (ADP) test limit for highly compensated employees (HCEs).

This means if you don't use the full amount of your concessional contributions cap ($27,500 in 2023–24), you can carry forward the unused amount and take advantage of it up to five years later. (From 1 July 2017 to 30 June 2021, the annual general concessional contributions cap was $25,000.)

See more than one plan. Catch-up contributions. If permitted by the SIMPLE IRA plan, participants who are age 50 or over at the end of the calendar year can also make catch-up contributions. The catch-up contribution limit for SIMPLE IRA plans is $3,500 in 2023 and 2024 ($3,000 in 2015 - 2022).

Yes, even if your birthday falls on New Year's Eve. Even better, if you only enrolled in an HDHP for part of the year, you can still prorate the catch-up amount by the number of months you had qualifying coverage, as long as you turn 55 before the end of the year.

Depending on specific circ*mstances, workers over age 73 can still contribute to an IRA, a 401(k), and other retirement accounts.

The 401(k) Catch-Up Contribution Age

Catch-up contributions allow workers age 50 and older to save more for retirement in a 401(k) plan. You can make catch-up contributions at any time during the calendar year in which you will turn 50, even if you have not yet reached your 50th birthday.

Employees can contribute up to $23,000 to their 401(k) plan for 2024 vs. $22,500 for 2023. Anyone age 50 or over is eligible for an additional catch-up contribution of $7,500 for both 2024 and 2023. The general limit on total employer and employee contributions for 2024 is $69,000 ($76,500 with catch-up).

Catch-up contributions are taxed in the same as normal 401(k) contributions. This usually means that your contributions reduce your taxable income for the year, and you pay taxes on the withdrawals later on in retirement.

401(k) contribution limits for 2024

The limit on additional catch-up contributions for employees 50 or older is $7,500, the same as in 2023. So, for those individuals, the total 401(k) contribution cap is $30,500.

Overall limit on contributions

The limit applies to the total of: elective deferrals (but not catch-up contributions) employer matching contributions.

Do employers have to match catch-up contributions? ›

Depending on the employer's terms regarding the 401(k) plan offered, catch-up contributions can technically be matched if the employer contributes up to the amount allowed by the IRS. U.S. Department of the Treasury. "Treasury Provides Guidance on Catch-Up Contributions." Internal Revenue Service.

401(k) Contribution Limits for Highly Compensated Employees

For 2023, highly compensated employees can contribute up to $22,500 to a 401(k) plan. If they're age 50 or older, they can contribute an additional $7,500 catch-up amount.

Use the 13-month rule to make up for lost time

You can contribute the full amount to your HSA if you meet the following conditions: Enroll in an HSA-eligible HDHP before December 1st of the given year. Maintain that HDHP coverage through December 31st of the following year, for a total of 13 months.

Can I contribute 100% of my paycheck into my 401(k)? Can I contribute 100% of my paycheck into my 401(k)? While you may be looking to contribute your entire paycheck to your 401(k), required federal and state withholding typically prevents you from doing so.

Individuals who are age 50 or over at the end of the calendar year can make annual catch-up contributions. Annual catch-up contributions up to $7,500 in 2023 and 2024 ($6,500 in 2021-2020; $6,000 in 2015 - 2019) may be permitted by these plans: 401(k) (other than a SIMPLE 401(k)) 403(b)

If you retire with no money, you'll have to consider ways to create income to pay your living expenses. That might include applying for Social Security retirement benefits, getting a reverse mortgage if you own a home, or starting a side hustle or part-time job to generate a steady paycheck.

A SIMPLE IRA plan provides small employers with a simplified method to contribute toward their employees' and their own retirement savings. Employees may choose to make salary reduction contributions and the employer is required to make either matching or nonelective contributions.

After the 2-year period, you can make tax-free rollovers from SIMPLE IRAs to other types of non-Roth IRAs, or to an employer-sponsored retirement plan. You can also roll over money into a Roth IRA after the 2-year period, but must include any untaxed money rolled over in your income.

Employer contributions to your SIMPLE IRA may be made in periodic contributions or in a single lump sum, as long as the contributions are deposited before the employer's tax return filing deadline (including extensions). May I stop contributing to my SIMPLE IRA? Yes.

SIMPLE IRA contribution limits are slightly lower than 401(k) limits, although higher than what is permitted with a traditional IRA. Employees can contribute up to $13,500 or 100% of their annual income – whichever is less. If they are 50 or older, they can deposit an extra $3,000 a year catch-up contribution.