What Are Retirement Catch-Up Contributions?

What Are Retirement Catch-Up Contributions?

Catch-up contributions let people ages 50 and older put more money into their individual retirement accounts (IRAs) and employer-based plans like 401(k)s as retirement age approaches. Catch-up contributions are optional, but they can help you boost retirement savings while taking advantage of retirement tax benefits.

Do you need to catch up? According to the Federal Reserve, about 35% of non-retirees think they're on track with their retirement savings. That leaves 65% feeling their retirement savings might need help.

There are many ways to measure retirement readiness, and your individual goals and needs are the clearest indicator. But here's a handy thumbnail to help you get your bearings: Some experts suggest aiming to have eight times your annual salary in retirement savings by the time you're 60. If your savings aren't in that ballpark (or heading there), you may want to consider a catch-up.

Learn more: Retirement Planning Guide

Catch-Up Contribution Limits

If you're 50 or over at the end of the calendar year, you can begin making annual catch-up contributions to certain retirement accounts. In 2025, people ages 60, 61, 62 and 63 may be eligible for "super catch-ups" of up to $11,250 for 401(k) plans and $5,250 for SIMPLE plans. Here's how catch-up contributions shake out for common retirement accounts in 2025.

Source: IRS

Note that IRA contribution limits apply across all IRA accounts. If you're 50 or older, you can contribute $5,000 to a traditional IRA and $3,000 to a Roth IRA (for a total of $8,000, including your catch-up), but you can't contribute $8,000 to each.

How Do You Make Retirement Catch-Up Contributions?

Adjusting your retirement contributions requires different steps depending on the type of retirement account you have. Here's how to add catch-up contributions to a work-based plan or self-directed IRA.

401(k) and Employer-Based Plans

Employer-based plans like 401(k)s are typically funded through automatic payroll deductions. If you want to add a catch-up contribution, contact your plan administrator at work.

You can increase the deductions that come out of your regular paychecks, and/or direct some or all of an upcoming bonus to your retirement plan.

Traditional and Roth IRAs

Most traditional and Roth IRAs can be funded electronically from your bank account or paycheck. With self-directed IRAs, you decide how much you want to contribute, as long as it's within annual contribution limits. Adjust your regular periodic contributions or make lump-sum catch-up contributions at your own discretion.

When Are Retirement Catch-Up Contributions a Wise Move?

Catch-up contributions give you the opportunity to increase your retirement savings and extend the tax benefits that go with them. Catch-up contributions might make sense for you if:

• You're behind on your retirement target. Catch-ups help you maximize your retirement savings in the home stretch, while you still have time to save.
• You've come into a cash windfall. Whether you've sold assets, received a large bonus or inherited money, putting additional funds into tax-advantaged retirement savings pads your nest egg and may help reduce your tax liability.
• You want to reduce your taxable income. You can exclude contributions to a traditional retirement plan from your current taxable income.
• You can afford larger contributions. Choosing catch-up contributions is easier when you already have funds to spare. Though you'll need to factor in early withdrawal penalties, tax savings on contributions or growth make retirement savings an attractive option.

Retirement catch-up contributions aren't always your best option. For example, you may want to pay down high-interest debt or build your emergency fund before increasing your retirement savings. If increased contributions will strain your monthly budget, upping them now might be counter-productive, particularly if you might be at risk for racking up debt. Try to look at retirement contributions as part of a larger financial strategy that considers your financial well-being both now and into the future.

Learn more: Should You Max Out Your Retirement Accounts?

The Bottom Line

Retirement catch-up contributions allow folks who are 50 and older to accelerate retirement savings by contributing beyond regular annual limits. You can use catch-ups to bolster your nest egg before you retire, or to allocate more of your savings to tax-advantaged accounts. Depending on the type of account you have—such as a traditional or Roth IRA—saving more for retirement might also reduce your taxable income today or provide tax-free distributions when you finally stop working. Just be sure that higher contributions fit within your budget and won't interfere with your other financial goals.

Retirement planning is a critical part of long-term financial stability, but it doesn't stand alone. Your credit health is equally important, even as you look forward to retirement. Experian's got you covered with free credit monitoring, no matter where you are in your retirement journey. Think of it as one more financial resource to keep in your back pocket.