Learn the Basics of 401(k) Catch-up Contributions

Got a late start on your retirement savings? Maybe you started saving early but now you’d like to add more funds to your account for additional financial security. If you’re 50 years or older, you may be eligible to make catch-up contributions to your employer-sponsored 401(k) plan. To learn more about how catch-up contributions work, read on.

How do catch-up contributions work?

If you’re already contributing to an employer-sponsored retirement plan, you may be aware that there are limitations to how much you’re permitted to contribute. Catch-up contributions can help you save more as you near retirement.

Beginning the first day of the year in which you turn 50, you will be eligible to make catch-up contributions to your retirement plan. These contributions raise the limits on the amount you can contribute to your 401(k).

What are the catch-up contribution limits?

Though the normal limit for a 401(k)-plan contribution is $22,500 this year, individuals aged 50 and over can make additional contributions of up to $7,500. Contributions may be pretax or Roth. See your Summary Plan Description for any limitations.

Why make catch-up contributions?

Not everyone will be able to contribute extra income to their retirement plan. However, if you can afford to make catch-up contributions, doing so can be an advantageous option. These contributions can also help to boost the value of your 401(k)retirement account over time.

Catch-up contributions can be beneficial for those who are closer to retirement and would like to save as much as possible before their final working years. They are also helpful if you started saving for retirement later in your career.

How do you get started making catch-up contributions?

With catch-up contributions, you can contribute as little or as much as the catch-up limit. When you are eligible for catch-up contributions, you will see a message on the ePlan Services participant dashboard that you’re able to contribute an additional $7,500 to your account. You can then easily update your 401(k) contributions.

If you’re interested in making catch-up contributions to your 401(k) plan but still have questions, visit the ePlan Help Center or call us today.

This content is for educational purposes only, is not intended to provide specific legal or financial advice and should not be used as a substitute for the legal advice of a qualified attorney or financial professional. The information may not reflect the most current legal developments, may be changed without notice, and is not guaranteed to be complete, correct, or up to date.