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Catch-up contributions: How do they work?

Owning a home, raising children, paying for life’s unexpected surprises—it’s easy for your retirement savings to fall short. But, fortunately, it’s never too late to reach your retirement savings goals.

In fact, after age 50, your retirement plan may allow you to make catch-up contributions. These let you make additional contributions—beyond the regular maximum contribution, which you must first meet—to your IRA or your organization's plan (if applicable).

2022 catch-up contribution limits

In 2022, you can make a maximum annual contribution of $20,500 to your employer’s retirement plan if you’re still working.1 And if you’re age 50 or older, you may be able to make an additional catch-up contribution of up to $6,500.*

Common catch-up provisions include:2

PlanAnnual contribution limitCatch-up contribution*Total contribution
401(k)/403(b)$20,500$6,500$27,000
Individual retirement account (IRA, traditional & Roth)$6,000$1,000$7,000
SIMPLE** 401(k) & SIMPLE IRA$14,000$3,000$17,000

To be eligible for catch-up contributions in any given year, you first must meet the maximum annual contribution IRS limit, or the max for your organization's retirement plan (if it includes a catch-up provision).

Maximize your annual contributions.

If you're 50 or older, the catch-up provision can provide a great opportunity to contribute more to your retirement savings. This is especially true if you haven't always been able to contribute the maximum amount in the past. The pre-tax contributions also allow you to reduce your current taxable income even further.

Calculate your contribution amount.

While making catch-up contributions is important, increasing the amount you're saving through a lump sum contribution may not always be easy. Consider increasing your contributions early in the year as you’re able.


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Estimate your ideal contribution per paycheck using the Retirement Wellness Planner.


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* Some plans may not allow catch-up contributions to the plan.

** Simple IRA and Simple 401(k) plans are available to employers with 100 employees or less.

1 Contributions are limited to the lesser of plan or the IRS limit as indexed.

2 IRS limit as indexed for 2022.

The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.