If you turn 50 by the end of this calendar year or are already over 50, you may have the option to make additional “Catch-up” contributions to your retirement account.

Catch-up contributions allow you to increase the value of your retirement account and may be made as long as certain conditions are met.  We encourage our clients to “catch up” if they have the opportunity.

Consider the following information on catch up opportunities:

Traditional or Roth IRA[1]

Individual contribution amount:  $6,000.00

Individual catch-up amount:  $1,000.00

SIMPLE retirement plan

Employee contribution amount:  $13,000.00

Employee catch-up amount:  $3,000.00

401(k), Roth 401(k), 403(b) or similar workplace retirement savings plan:

Employee contribution maximum: $19,000.00

Employee catch up maximum:  $6,000.00

SEP IRAs and Solo 401(k):

For the self-employed and small business owners, the amount you can save in a SEP IRA or a solo 401(k) in 2019 is $56,000. This amount is based on the amount you can contribute as an employer, as a percentage of your salary.  The compensation limit used in the savings calculation in 2019 is $280,000.

In addition to the above basic information, please keep in mind the following:

  • Salary deferral v. direct contribution to the account. Some catch-up contributions must be made by salary deferral while other contributions may be made directly to your account.
  • Contribution deadlines. Some catch-up contributions must be made by the end of the plan year while others have a deadline of April 15 for making a contribution.
  • Income limitations. Most plans have income limits. For example, the income limitations for contributing to an IRA or Roth IRA are single filer:  $122,000 – $137,000 and married filing jointly:  $193,000 – $203,000.  For other plans like a SEP IRA or 401(k), employer and employee contributions may be made up to a certain salary amount.
  • Age limitations.  You can only contribute to a traditional IRA up to page 70 ½; there is no age limit for a Roth IRA contribution.

We have talked about individual and employee contribution information only.  Employer matching amounts are an important component of any company savings plan.  If at all possible, you should save enough each year in your work-based retirement plan to receive the maximum employer matching contribution.

We are happy to discuss and answer any questions you may have about your specific retirement plans.   Please call us at 214.727.6000 to set up a phone or in-person meeting.

[1] This amount is the maximum you can contribute to all IRAs and Roth IRAs. If your income is less, you can only contribute your taxable compensation for the year.  Also, your contributions may be limited if you or your spouse have a retirement plan at work.