Best Tip for National Retirement Security Week: Catch-up Contributions!

Best Tip for National Retirement Security Week: Catch-up Contributions

Whoo-hoo! It’s National Retirement Security Week. It’s the perfect time to do a reality check on your retirement savings account. For everyone over 50, here’s our biggest tip: Catch-up contributions. If you regret not being as vigilant about saving for your retirement as you should have been, or you’ve decided to up your goals, catch-up contributions could be for you.  

Catch-up contributions are just that – an opportunity for people age 50 and older to “catch up” on retirement savings by putting additional money into their retirement plans over and above standard limits.

IRS Regulations
It’s a fairly straightforward concept, but the IRS has put a few parameters around who can contribute, qualifying plans and how much extra cash can be stashed away yearly:

  • Catch-up contributors must be plan participants age 50 or older.
  • Most 401(k) plans allow for catch-up.  Check to see if your plan has this option.
  • IRA plans are eligible for catch-up contributions.
  • Annual catch-up contribution limits for 2017 are based on retirement product type: 
    • In IRA and ROTH IRA plans, eligible participants can contribute up to an additional $1,000 over the plan maximum of $5,500 for annual savings totaling $6,500.
    • In Simple IRA plans, eligible participants can contribute up to an additional $3,000 over the plan maximum of $12,500 for annual savings totaling $15,500.  
    • In 401(k) plans, eligible participants can contribute up to an additional $6,000 over the plan maximum of $18,000 for annual savings totaling $24,000.

Benefits of Catching Up
Setting more money aside for retirement is a personal but smart decision that provides certain advantages. Choosing to make catch-up contributions to your retirement plan:

  • Puts you in the best financial position to retire when and how you want to – maybe even earlier than anticipated.
  • Allows you to maximize tax deductions related to retirement plan contributions.

Catch-up contributions can have a significant impact on the amount of time your retirement money can buy. Let’s talk about it. Contact us today, or you can explore more on our CoPilot website.

Nicholas Crary, CPFA - Financial Services Representative - nccrary@pai.com - 800-236-7400 x3381

Nick is a subject matter expert on 401(k), retirement savings, participant advice, small business 401(k), investments, education on options.