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Playing retirement catch-up

If you participate in a workplace 401(k), you are probably aware that the 2019 contribution limit specified by the IRS is $19,000 (and increasing by $500 to $19,500 for 2020). But if you are over 50, you are also eligible to save an additional $6,000 per year (increasing to $6,500 in 2020) in “catch-up contributions” to boost your retirement savings as you approach retirement age. You can also make an additional $1,000 catch-up contribution to an IRA. 

Are you over 50?

According to IRS guidelines, if you are over 50, you are eligible to make catch-up contributions to your 401(k) or IRA, provided that you do not exceed the IRS’ IRA income phase-out limits. Please note that although the vast majority of employer-offered plans include the option of making catch-up contributions, they are not required to include catch-up contributions. If you are relying solely on a workplace 401(k) for your retirement savings, you should check your plan to confirm that catch-up contributions are offered. You have until December 31, 2019, to make catch-up contributions to your 401(k). If you have an IRA, you have until April 15, 2020, to make your IRA catch-up contributions. 

Do you turn 50 in 2020?

If you turn 50 next year and do not exceed the IRS' IRA income phase-out limits, you are eligible to make catch-up contributions throughout the year, even if your 50th birthday is December 31, 2020. So if you are 49 for part of the year and are contributing the 2020 maximum of $19,500 to your 401(k) and want to contribute the maximum $6,500 catch-up amount for 2020, you don’t have to wait until your fiftieth birthday to start making your catch-up contributions. You can start to up your 401(k) contributions in January so that your contributions are spread evenly over all your 2020 paychecks. Paycheck reductions of $500 per month will hurt a lot less than having even larger chunks of your paycheck withheld later in the year.

Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Alliant Credit Union (ACU) and Alliant Retirement and Investment Services (ARIS) are not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using ARIS, and may also be employees of ACU. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, ACU or ARIS. Securities and insurance offered through LPL or its affiliates are: 

Not Insured by NCUA or Any Other Government Agency

Not Credit Union Guaranteed

Not Credit Union Deposits or Obligations

May Lose Value


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