Catch-Up Contributions for Various Types of Retirement Plans

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Whether you've saved regularly throughout your career or got a late start putting money away for retirement, you would probably welcome the chance to stash a bit more cash in your tax-favored retirement plan each year. Fortunately, if you are age 50 or older, you can.

The IRS offers retirement savers something known as a catch-up contribution. But even individuals who have saved diligently and don't necessarily need to catch up can take advantage of it. If you are at least 50 years old or will turn 50 sometime in 2019 and have a traditional IRA, Roth IRA, SIMPLE IRA, SARSEP, 401(k), SIMPLE 401(k), 403(b), or 457(b) plan, you may qualify to save a little bit extra.

The IRS imposes limits on how much you can contribute to most tax-favored retirement accounts each year. There are limits on catch-up contributions as well.

Catch-Up Contribution Amounts for Traditional and Roth IRAs

If you have a traditional IRA or Roth IRA, you can contribute up to $6,000 to it in 2019. If you are age 50 or older, you can contribute a maximum of $1,000 more, or $7,000 total, unless your taxable compensation was less than $7,000. In that case, you may contribute no more than the amount of your taxable compensation.

The amount of money you can contribute to your Roth IRA may be affected by your modified adjusted gross income (MAGI) and your federal income tax filing status.

If your filing status is ... ... and your MAGI is ... ... you can contribute ...
Married filing jointly or qualifying widow(er) less than $193,000 up to the contribution limit.
Married filing jointly or qualifying widow(er) more than $193,000 but less than $203,000 a reduced amount.
Married filing jointly or qualifying widow(er) $203,000 or more zero.
Married filing separately and you lived with your spouse at any time during the tax year less than $10,000 a reduced amount.
Married filing separately and you lived with your spouse at any time during the tax year $10,000 or more zero.
Single, head of household, or married filing separately and you did not live with your spouse at any time during the tax year less than $122,000 up to the contribution limit.
Single, head of household, or married filing separately and you did not live with your spouse at any time during the tax year $122,000 or more but less than $137,000 a reduced amount.
Single, head of household, or married filing separately and you did not live with your spouse at any time during the tax year $137,000 or more zero.

To determine the reduced amount you may contribute if you are in one of those affected income ranges, first 1) subtract $193,000 from your MAGI if you are married and filing a joint return or are a qualifying widow(er), 2) subtract nothing from your MAGI if you are married and filing a separate return and you lived with your spouse at any time during the year, or 3) subtract $122,000 from your MAGI if you are a different type of filer. Divide the resulting number by $15,000 if you are single, head of household, or married and filing a separate return and did not live with your spouse at any time during the tax year or by $10,000 if you are married and filing a joint return, a qualifying widow(er), or married and filing a separate return and you lived with your spouse at any time during the tax year. Then multiply that number by the maximum contribution limit. Finally, subtract that number from the maximum contribution limit.

Catch-Up Contribution Amounts for SIMPLE IRAs, SEP IRAs, and SARSEPs

If you have a SIMPLE IRA—an IRA a small employer and its individual employees participate in, often instead of a more-traditional 401(k) retirement plan, with the employer generally matching up to 3 percent of the employee's compensation—you can contribute as much as $13,000 in 2019. If you are age 50 or older and your employer allows catch-up contributions, your limit increases by $3,000. If you participate in a second employer-offered retirement plan in 2019, the total amount you can contribute to both plans is $19,000.

Catch-up contributions are not permitted in SEP IRAs, which are established by business owners so they can contribute to their employees' retirement. In fact, by definition, SEP IRAs receive contributions only from employers. The maximum amount an employer can contribute to a SEP IRA in 2019 is the lesser of 1) $56,000 or 2) 25 percent of the employee's compensation.

If you participate in something called a SARSEP, which is a type of employer-sponsored retirement plan set up prior to 1997, you can contribute the lesser of 1) $19,000 or 2) 25 percent of your compensation in 2019. You can also make a catch-up contribution of $6,000 in 2019.

Catch-Up Contribution Amounts for 401(k) Plans

If you have a 401(k) plan, you can generally contribute as much as $19,000 to your plan in 2019. If you are age 50 or older in 2019 and your employer allows catch-up contributions, your limit increases by $6,000.

The maximum total amount that can be contributed to a 401(k) by both you and your employer in 2019 is the lesser of 1) $56,000 (or $62,000 if catch-up contributions are included) or 2) the amount of your compensation.

You can invest up to $13,000 in a SIMPLE 401(k) plan—which is for employees of a small business with 100 or fewer workers—in 2019 and an additional $3,000 in catch-up contributions if you are 50 or older sometime in 2019.

Catch-Up Contribution Amounts for 403(b) and 457(b) Plans

The 2019 contribution limits for a 403(b) or 457(b) plan are generally the same as for 401(k)s: $19,000 in regular contributions and $6,000 more in catch-up contributions—if they're allowed by your employer and you are 50 or older.

If you are enrolled in a 403(b) plan—which is for certain workers in public schools and nonprofit organizations and for certain religious leaders—and you have worked for your employer for at least 15 years and your employer's plan permits it, you can contribute an additional catch-up amount to your plan. The amount is the lesser of the following: 1) $3,000, 2) $15,000 minus the number of additional catch-up contributions made in prior years because of this rule, or 3) $5,000 times the number of years you've worked for this employer, minus the total catch-up contributions made in prior years.

The maximum amount that can be contributed to a 403(b) by both you and your employer in 2019 is the lesser of 1) $56,000 or 2) your total compensation, including benefits, for your most recent year of service.

A 457(b) plan—which is for state and local government workers—may allow an additional catch-up contribution in the three years before retirement. The amount is the lesser of 1) $38,000 (twice the annual limit of $19,000) or 2) the basic annual limit of $19,000 plus the amount of the basic annual limit not used in prior years. The second amount option is permitted only if you are not making 50-or-older catch-up contributions.

The maximum amount that can be contributed to a 457(b) by both you and your employer in 2019 is the lesser of 1) $19,000 or 2) your total compensation, including benefits.

Changes in Limits

Contribution limits increase over time, typically every year or every other year. They usually adjust to inflation in $500 increments.

Professional Advice

If you have any questions about catch-up contribution limits or something else related to retirement accounts, you should seek the advice of an accountant or tax attorney.

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