If you’re worried that you haven’t been saving enough for your retirement, you’re not alone. In fact, Congress recognized that there was a concern from many that baby boomers weren’t or hadn’t been saving enough for retirement. As a result, Congress added a catch-up contribution option that may help ease your mind a bit.
“A catch-up contribution is any elective deferral made by an eligible participant that is in excess of the statutory limit ($18,000 in 2017), an employer-imposed plan limit, or any limit applied in order for the plan to satisfy the ADP nondiscrimination test for the year,” according to 401kHelpCenter.com.
The option is for Individuals who are age 50 or over at the end of the calendar year. Catch-up contributions up to $6,000 in 2015 - 2017 may be permitted by these plans:
The new catch up option is pretty straightforward. You may make an additional $6,000 (for 2017) pretax contribution to your 401k plan, on top of your regular pre-tax contribution limit.
The $6,000 limit isn’t subject to any other federal or plan contribution limits. The catch up is made on top of the current limits. So, if you contribute the maximum regular contribution of $18,000 (in 2017) you may still make an additional catch up contribution.
If your plan has restrictions that keep you from making the maximum contribution, you can still make a catch up contribution.
The new option is a great way to contribute more toward your retirement and do take a little bit of the stress off.
Contact us at http://www.mcleansteelvalley.com for more information.
As federal and state tax rules are subject to frequent changes, you should consult with a qualified tax advisor prior to making any investment decision.