Catching up at the right time
No matter the reason for falling behind, it's important to refocus on the future as soon as you're able to do so. Here's how to restart and gain ground.
What is a catch-up contribution?
Starting at age 50, you can save even more to your tax-advantaged retirement accounts like 403(b)s, 401(k)s, Traditional and Roth IRAs, SIMPLE IRAs, and SEP IRAs. Catch-up contributions can help you boost your retirement savings plan in the critical years before retirement.
Am I eligible for catch-up contributions?
If you are 50 or older, the IRS allows you to contribute more through catch-up contributions.
Catch-up contribution limits
Here's a breakdown of key details for the 2024 tax year.
| 403(b) & 401(k)plans | Traditional and Roth IRAs | SIMPLE IRA | SEP IRA | |
| Regular contribution limit | $23,000 | $7,000 | $16,000 | The lesser of 25% of compensation or $69,000 |
|---|---|---|---|---|
| Catch-up contribution limit | $7,500 | $1,000 | $3,500 | Not applicable (SEP IRAs do not have catch-up contributions) |
| Total annual contribution limit | $30,500 | $8,000 | $19,500 | NA |
Special catch-up contributions
Certain professionals may qualify for additional catch-up contributions:
Eligible professions
Public school teachers, hospital employees, welfare service social workers, church employees, and home health service agency workers.
Requirements
Must have worked for the same employer for at least 15 years.
What if I don't have an employer plan?
Consider an IRA. Contributing to an individual retirement account (IRA) is another way to catch up on savings, especially if you do not have access to a retirement plan at work. If you do have access to a retirement plan at work, at least be sure you contribute enough to your workplace plan to take advantage of any employer match before funding an IRA.
There are two main types of IRAs—Roth and Traditional.
Roth IRA
Roth IRAs, which you fund with after-tax dollars, provide tax-free growth and tax-free withdrawals in retirement.
Traditional IRA
Traditional IRAs offer tax-deferred growth, with contributions potentially tax-deductible, but withdrawals in retirement are taxed.
If you miss a year of saving for retirement at your job, you cannot get that year back. That's where making additional contributions to an IRA can help bridge the gap.
Consider funding a health savings account
Healthcare is often a major retirement expense. A health savings account (HSA) lets you put aside money for qualified medical expenses and is available if you choose a high-deductible healthcare plan.
HSAs offer a triple tax benefit:
- contributions are tax deductible
- the money grows tax free
- and withdrawals for medical expenses tax free too.
In 2024, an individual can contribute up to $4,150, and families can contribute up to $8,300. HSAs also allow for catch-up contributions. Individuals who are 55 or older by the end of the tax year can choose to increase their contribution limit up to an additional $1,000 a year.
The amount you contribute can be deducted from your taxes for that year, and many employers offer to contribute to your account. Unlike a flexible savings account, unused money in an HSA can roll over year after year. Your HSA money can be invested and will grow tax-free to help fund future health costs.
The plans also offer some flexibility in how you use the funds. When you turn 64, you can withdraw money from the plan and use it for non-health expenses. While you’ll pay tax on those contributions and earnings, you won't have to pay any additional penalties.
This material is for informational or educational purposes only and is not fiduciary investment advice, or a securities, investment strategy, or insurance product recommendation. This material does not consider an individual’s own objectives or circumstances which should be the basis of any investment decision.
Investment products may be subject to market and other risk factors. See the applicable product literature or visit TIAA.org for details.
Retirement check refers to the annuity income received in retirement. Guarantees of fixed monthly payments are only associated with TIAA's fixed annuities.
Investment decisions should be made based on the investor's own objectives and circumstances. Advice is obtained using an advice methodology from an independent third-party.
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