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Your 401(k) Could Soon Get a $10,000 Catch-up Boost


The SECURE 2.0 Act is a follow up to the 2019 bill that made changes to the way Americans save for retirement. It was passed by Congress in December 2022. There are various important provisions in this retirement legislation, but one that greatly impacts those who are nearing retirement is the increase to the catch-up contributions allowed in retirement plans. There are specifics each type of retirement plan — discussed below — but what it comes down to is this: if you’re between ages 60 and 63, you might soon be able to put a bigger chunk of your income into a retirement plan. For help with retirement planning, including maximizing catch-up contributions, consider working with a financial advisor.

Retirement Plan Contribution Limits Explained

There are limits on how much you can contribute to a retirement plan each year. Here are the limits for 2022 and 2023 for some of the most popular and common retirement plan types:

  • 401(k) Plan: $20,500 for 2022 and $22,500 for 2023
  • Traditional IRA: $6,000 for 2022 and $6,500 for 2023
  • Roth IRA: $6,000 for 2022 and $6,500 for 2023
  • SIMPLE IRA: $14,000 in 2022 and $15,500 for 2023

You can only contribute up to these limits for any tax year, which coincides with the calendar year.

Retirement Plan Catch-Up Contributions Explained

SmartAsset: SECURE 2.0 Act Catch-Up Contributions

There is a notable exception to the above limits, though — catch-up contributions for those who have reached age 50. These allow older people to contribute more to their plans as they approach retirement, giving them a better chance of a secure retirement — especially if they weren’t able to save as much as they should have in the earlier years of their careers. Here are the current catch-up contribution totals:

  • 401(k) Plan: $6,500 in 2022 and $7,500 in 2023
  • Traditional IRA: $1,000 in 2022 and 2023
  • Roth IRA: $1,000 in 2022 and 2023
  • SIMPLE IRA: $3,000 in 2022 and $3,500 in 2023

SECURE 2.0 Act Catch-Up Contribution Changes

Among other changes, the SECURE 2.0 Act will increase the amount of catch-up contributions allowed for some older Americans, namely those who are between ages 60 and 63. Here are the proposed increases:

  • 401(k) Plan: $10,000
  • Traditional IRA: No set increase, but indexes current $1,000 catch-up limit to inflation.
  • Roth IRA: No set increase, but indexes current $1,000 catch-up limit to inflation.
  • SIMPLE IRA: $5,000, indexed to inflation.

These proposed super-sized catch-up contributions are only three years. For 65-year-olds and beyond, it’s back to the regular catch-up contribution limits.

What This Means

SmartAsset: SECURE 2.0 Act Catch-Up Contributions

For retirement savers significantly below age 62, this doesn’t mean much — you can keep saving as you have been, and you should make sure to save as much as you can to ensure a fully-funded retirement.

If you are at or approaching age 62, though, this gives you an extra chance to put aside money so that you can enjoy your golden years without having to keep working or worry too much about money. That catch-up boost when you’re between age 60 and 63 can put in you a more secure position to retire. A financial advisor can help you figure out just how much of this catch-up contribution increase you should take advantage of.

Bottom Line

The SECURE 2.0 Act was passed by Congress. Among other things, it raises the catch-up contribution limits for retirement savers between ages 60 and 63, allowing these older savers to put aside more as retirement approaches.

Retirement Planning Tips

  • A financial professional can help you make all the right retirement planning decisions. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • If you have access to a 401(k) plan, make sure you use it — and make sure you take advantage of any free money available as a company match.

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