Catch-Up ContributionsAs you approach retirement, you may find you need to save more to reach your retirement goals. And you may also, at this point in your life, have additional disposable income as you pay off your mortgage and as your children move out on their own. What better way to put that income to use, than to put it toward your retirement?
Legislation allows individuals who are at least 50 years old by the end of the calendar year to make additional contributions to their employer-sponsored retirement plan or IRA. For 401(k)s, eligible individuals must meet a plan limit the maximum deferral percentage set by the plan or the IRS limit ($17,500 in 2014) to be eligible to make catch-up contributions. The additional amount you can contribute is $5,500.
You can contribute another $1,000 per year to an IRA.
If you will be 50 or older this year, you can elect to make these additional pre-tax contributions to your 401(k) by contacting your benefits department. IRA investors can simply add the additional investment to their yearly contribution.