Q&A of the Week November 30, 2022

Question

What are catch-up contributions?

Answer

Catch-up contributions are allowed for employed individuals who are at least 50 years old to make additional contributions to their 401(k) and IRAs. They provide tax benefits for people who are trying to add to their retirement savings later in their career.

For 2022, the catch-up contribution limits are:

• 401(k) - $6,500

• IRA - $1,000

• SIMPLE IRA - $3,000

Adjustments are made each year and changes are typically made due to inflation.