Have you saved enough? Whether you started late, or have regularly saved throughout your career, you might wish you could stash some additional cash in your retirement fund. Fortunately, if you’re 50 or older, you can. The IRS offers “Catch-Up Contributions” as a way to save a bit extra each year.
Starting at age 50 you can contribute an extra $6,500 a year to many workplace retirement plans. This extra money helps employees who are behind in their retirement savings to catch up and stay on target for saving retirement funds. The tax advantage on Catch-Up Contributions can be significant, depending on your tax bracket. Mostly high earners are able to take advantage of Catch-Up Contributions. You can also make these contributions to Roth IRAs with the advantage being once you contribute the $6500 to your Roth IRA and pay taxes on it up front, you will never have to pay taxes on it again.
If you are over 50, make sure to discuss this important retirement contribution with your financial advisor.
Playing Catch Up
November 15, 2022