Everything You Need to Know About Catch-Up Contributions in 2024

If you’re nearing retirement and feeling worried you haven’t saved enough, here’s the good news: It’s never too late to save. If you weren’t able to put away as much in your younger working years as you’d have liked, there are many ways to catch up on retirement savings today. And once you reach a certain age (perhaps when you’re making more and your expenses start to fall), you unlock another way to get caught up: catch-up contributions.  

We’ll help you understand how catch-up contributions work and give you a download on the rules surrounding catch-up contributions to help you see how this benefit might fit into your retirement plan. 

What are catch-up contributions? 

When you contribute to a tax-advantaged retirement savings account, the IRS sets limits as to how much you can contribute each year. However, once you reach age 50, you’re able to contribute an added amount—called a catch-up contribution—in addition to the general contribution limit, making your overall annual contribution limit higher.  

Catch-up contributions are intended to give you the opportunity to get your retirement savings closer to where you’d like them to be in the years before you retire by allowing you to contribute more than what you’re allowed to contribute when you’re younger.  

How do catch-up contributions work?  

Most tax-advantaged retirement accounts—including a 401(k), an IRA, a SIMPLE IRA, 403(b) and a 457(b)—allow you to begin making additional contributions in the calendar year that you turn 50. How much more you’re able to contribute will depend on your retirement plan, as different types of plans have different contribution limits.  

Catch-up contributions can make a substantial difference in what you’re able to save, thanks to compound interest.  

Let’s say you’ve been contributing to a 401(k), and now at age 50 you have a balance of $200,000. While it may feel like you’re behind, you’ve decided that moving forward, you’re going to contribute up to the full contribution limit (which is $23,000 for a 401(k) in 2024). By contributing an additional $7,500 (the 401(k) catch-up contribution limit in 2024), you could grow your retirement savings by quite a bit in a few short years.  

If you began making catch-up contributions at age 50, by age 65, you could have saved an additional $198,101.43 for retirement by maxing out your catch-up contributions. 

Catch-up contribution limits 

Though you’re able to contribute more to a retirement account after age 50, there are still limits on what you’re able to contribute in a given year. Here are the 2024 catch-up contribution limits for some common retirement savings accounts:  

401(k) catch-up contribution limit 

In 2024, you’re able to contribute an additional $7,500 to a 401(k) each year, so long as you’ve made your contributions by the end of the calendar year. So, according to the contribution limits for a 401(k), after age 50, you could contribute a total of $30,500 to a 401(k) each year.  

IRA catch-up contribution limit 

For an IRA, you’re able to contribute an extra $1,000 each year as of 2024, which means you can contribute a total of $8,000 per year after age 50 ($7,000 contribution plus $1,000 catch-up), according to the IRA contribution limits¹. One perk of an IRA is that you have until the tax deadline to make contributions for that year. So, you can make contributions to your IRA for the 2024 calendar year until April 15, 2025.  

SIMPLE IRA catch-up contribution limit 

You’re able to contribute an added $3,500 per year to a SIMPLE IRA in 2024 if you’re aged 50 or older. It means that including the $16,000 individual contribution limit, you’re able contribute $19,500 to a SIMPLE IRA in 2024.  

403(b) and 457(b) catch-up contribution limit 

In 2024, those age 50 and older are able to contribute an added $7,500 to a 403(b) or 457(b). On top of the $23,000 individual contribution limit, means you can make a total contribution of $30,500. 

In addition, with a 403(b) plan or a 457(b) plan, you may also be eligible to save even more as you near retirement. For example, with some 403(b) plans, once you have at least 15 years of service, you could be eligible to contribute even more to a retirement account—in addition to catch-up contributions.  Likewise, with some 457(b) plans, there are rules that allow for special catch-up contributions within three years of retirement.   

HSA catch-up contributions 

Once you turn 55, you’ll also be eligible to take advantage of catch-up contributions to a health savings account (HSA) as well, if you contribute to one. In the tax year that you turn 55, you can increase your contribution to your HSA by $1,000 per year.  

Contributing to your HSA has a triple tax benefit: You contribute pre-tax dollars, your money can grow tax-free, and you’re able to withdraw money tax-free (as long as it’s used for qualifying healthcare expenses). This can result in some real savings as you get older and may potentially be spending more on health care.  

Are catch-up contributions changing in 2024? 

Though the IRS usually adjusts overall contribution limits each year to account for inflation, catch-up contribution limits in 2024 did not change from 2023. However, you may see some larger changes to catch-up contributions in the next few years. Starting in 2024, the IRS will begin adjusting the catch-up contribution limit according to inflation. So, depending on the federally-determined cost of living per year, you may see a higher contribution limit for people age 50 and older.  

The SECURE 2.0 Act of 2022 introduced some changes to catch-up contribution eligibility requirements that were going to originally take effect in 2024 but were delayed until 2026. In 2024 and 2025, you can continue making catch-up contributions as either pre-tax or Roth.  However, beginning in 2026, you’ll need to make under $145,000 to be eligible to make pre-tax catch-up contributions to a traditional 401(k) plan when you turn 50. If you make more than $145,000, you’d still be eligible to make catch-up contributions, but they would be after-tax contributions to a Roth account.  

Another change coming in 2025 is that those aged 60 to 63 will be eligible to make catch-up contributions of up to $10,000 per year (adjusted annually for inflation) or 150 percent of the plan’s standard catch-up limit for that year (whichever is greater).  

How to make catch-up contributions  

Starting to make catch-up contributions can be as simple as contacting your plan administrator or accessing your online account to adjust your contribution amount. However, there’s more that goes into this decision.  

A good retirement plan relies on multiple savings vehicles, and though you’re able to contribute more at age 50, you’ll want to think about what account to contribute to, how much to contribute, and how those contributions might affect your overall savings plan.  

A Northwestern Mutual financial advisor can help you look at what you’ve saved and develop a plan that’ll leverage the benefits of multiple financial options. Using options beyond your 401(k) can help you maximize your retirement income while also planning for common risks like market volatility, inflation and taxes. Having such a plan can help you worry less about creating reliable income in retirement, allowing you to focus more on how you’ll spend your hard-earned retirement.       

¹In order to contribute to a Roth IRA, you must meet the income limits established by the IRS. You must also meet the IRS income limit requirements to deduct traditional IRA contributions. 

This publication is not intended as legal or tax advice. The information is intended solely for the information and education purposes and must not be used as a basis for legal or tax advice.  Northwestern Mutual and its financial representatives do not provide legal or tax advice. Consult with a tax or legal professional for tax advice specific to your situation.