What is the 401(k) catch-up contribution limit for seniors?

Once you reach the age of 50, you are eligible to make increased contributions to your 401(k) retirement account. This is called a catch-up contribution, which is designed to help seniors nearing retirement to give their savings an extra boost to their retirement nest egg. 

The catch-up contribution limit changes every year. As of 2020, citizens aged 50 or older can contribute an additional $6,500 per year on top of the standard $19,500 per year for a total of $26,000 per year. This contribution limit could remain the same in 2021, though there could be some changes with the upcoming administration change and any new policies they introduce.

Catch-up contribution limits for other retirement accounts

If you have been saving in more than one retirement account as part of your retirement planning, you need to familiarize yourself with their contribution catch-up rules. 

• IRA catch-up contribution limit — The catch-up contribution limit for IRA accounts is an additional $1,000 per year for a total annual limit of $7,000.
  
• SIMPLE 401(k) contribution limit — The contribution limit for a SIMPLE 401(k) used by small-business owners is $3,000 for a total annual limit of $16,500.
  
• Thrift Savings Plan, 403(b), 457 plans — The catch-up rate for these other types of retirement accounts is the same as a 401(k) at $6,500 per year.

Talk to a ProVise CFP® professional about planning for your retirement

Are you one of the many Americans who dream of having a long and comfortable retirement? A good savings strategy can help you build up a nest egg that can fund the retirement of your dreams. Our team at ProVise Management Group can help you build a retirement strategy for savings, distributions and supplemental income.

Our CERTIFIED FINANCIAL PLANNER™ professionals can get to know you and your current financial circumstances, goals, risk tolerance and personal values to help you develop a plan that works for you. We can also create a written plan for you at a fiduciary standard of care. All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.

Are you ready to talk to a professional about planning for retirement? Contact ProVise today to schedule a complimentary consultation.