As you get closer to your retirement date, it’s not uncommon to start to feel unprepared for what’s ahead. Sure, you’ve been saving and planning, but how can you be sure that you’ve done enough? If you’re feeling this way, you really only have three options moving forward:

  1. Save more
  2. Spend less
  3. Push back your retirement date

For many, number three simply isn’t an option, and number two might be more difficult than you first anticipated. Likewise, the closer you get to retirement, the harder it can be to save more than you already are.

But if you’re over 50, the IRS allows you to make what are called catch-up contributions to your retirement accounts. These contributions can be the key to you putting more away as you navigate the home stretch on your way to retirement.

What Are Catch-Up Contributions?

There’s a maximum amount you’re allowed to contribute each year into your retirement accounts. For 2021, the most you’re allowed to contribute to a 401(k), 403(b), and most 457 accounts is $19,500. This limit represents the sum total of what you’re allowed to contribute to each of these types of accounts. So, for instance, if you have multiple 401(k) accounts, then the total maximum you’re allowed to contribute between all of them is $19,500.

However, recent IRS provisions have worked to make it easier for people to save for retirement, and thus the catch-up contribution was born. For the year 2021, workers over 50 years old are allowed to make additional catch-up contributions to these accounts to the tune of $6,500. This means that if you max out your 401(k) contributions and your available catch-up contributions, you can contribute a total of $26,000.

Additionally, if you have an IRA, you’re allowed to contribute an extra $1,000 in catch-up contributions for the year 2021. So, if you have both a 401(k) and a Traditional IRA, you’re allowed to contribute an extra $7,500 to your retirement accounts. The below table shows your contribution limits for the year 2021:

Plan Type Base Contribution Limit Catch-Up Contribution Limit Total Contribution Limit

401(k), 403(b), Roth 401(k), Roth 403(b)








Traditional IRA, Roth IRA












HSA (Individual/Family)




* Limited to the amount of the base limit not used in previous years.
** Available only to those 55 and older.
Source: Internal Revenue Service

Benefits of Catch-Up Contributions

Who wouldn’t want to be able to save more when you really need it?! Catch-up contributions were created in the Economic Growth and Tax Reconciliation Relief Act of 2001 (EGTRRA) as a way to help give people a boost to their retirement savings. If you were unable to save more in your younger years, catch-up contributions give you a way to literally “catch up” your savings. They were originally supposed to sunset in 2010, but they became permanent with the Pension Protection Act of 2006.

Additionally, maximizing catch-up contributions to your retirement accounts can come with income tax savings. Since employer-sponsored accounts like 401(k)s and 403(b)s are tax-deferred, you can put off paying taxes on those contributions until you take a withdrawal down the road. This means that if you maximize your base contributions and catch-up contributions and put in the full $26,000, that amount isn’t counted toward your annual income. If you’re in the 24% income tax bracket and contribute the full amount to your 401(k), you can save $6,240 in taxes—or $1,560 more than younger workers who aren’t allowed to make catch-up contributions.

Thinking about how these accounts are taxed could also factor into where you want to make your catch-up contributions. For instance, say you have an employer-sponsored 401(k) and a personal Roth IRA. Maybe you only have $6,500 in disposable income that you could make toward catch-up contributions into these accounts. Thinking about the tax treatment and where it fits into your financial plan for short-, mid-, and long-term money could be how you determine where to make those extra catch-up contributions. Do you put all $6,500 into your 401(k)? Do you put $1,000 into your Roth IRA and the remaining $5,500 into your 401(k)? Do you put $1,000 into your Roth IRA and keep the rest in your bank account for a rainy day?

While everyone’s situation is different, taking advantage of these increased contribution limits is one of the easiest ways to ensure you’re saving enough for retirement. Diligent saving, conservative spending, and a carefully constructed financial plan can help make sure you’re still on the path to the retirement of your dreams.


This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

William B. Mullin

William B. Mullin

Senior Vice President, Financial Advisor

CFP®, ChFC®, Series 7, 24 & 63 Securities Registrations*, Series 65 Advisory Registration Will began his career as an Officer in the United States Army Corp of Engineers, where he served in Operation Desert Storm/Shield and was awarded the Bronze Star. He has more than 25 years of business and personal financial services experience running companies in both the private and public sector. Over that time, Will has worked with business owners, entrepreneurs and private equity to...Read More