|
What is a Catch-Up Contribution?
Individuals who are age 50 and older have the opportunity to make an additional contribution to certain types of tax-advantaged retirement accounts. Deferred catch-up contributions may be made to 401(k), 403(b), 457 and Simple plans. Additional catch-up contributions may be made to traditional IRA’s and Roth IRA’s. These contributions are in addition to your normal annual contribution limits to the above mentioned plans.
Catch-up contributions for 2010 are as follows:
401(k) |
$5,500 |
403(b) |
$5,500 |
457 |
$5,500 |
Simple |
$2,500 |
IRA |
$1,000 |
Roth IRA |
$1,000 |
Your salary level and the terms of your salary reduction plan could cause the catch-up contributions to be less than indicated above. Before making catch-up contributions check with your plan to make sure the plan allows catch-up contributions and that you qualify to contribute the entire amount of the catch-up contribution.
Let’s look at the long term impact of making catch-up contributions.
The following chart will show you how much extra retirement savings you can accumulate if you start making contributions at age 50 and continue until you reach age 65.
Contribution Amount |
3% Return |
4% Return |
5% Return |
$5,500 |
$111,000 |
$121,000 |
$131,000 |
$2,500 |
$ 50,000 |
$ 55,000 |
$ 59,000 |
$1,000 |
$ 20,000 |
$ 22,000 |
$ 24,000 |
Remember you have until 4/15/11 to make IRA and ROTH IRA catch-up contributions for the 2010 tax year.
For more information, please contact:
Juanita DiMattesa, Tax Manager
215-564-1900 | info@asherco.com
Back to News Archive
|
