What is the catch-up contribution amount for 401k plans for individuals over age 50?

The catch-up contribution amount for 401(k) plans for individuals who are 50 years of age and older is $6,000. This provision allows individuals nearing retirement to save additional funds beyond the standard contribution limit. The ability to make catch-up contributions is intended to help older workers increase their retirement savings when they may have not saved enough earlier in their careers or when they may be facing increased financial needs as they approach retirement age.

As of 2023, the standard contribution limit for 401(k) plans is $22,500, and the catch-up amount, which individuals can contribute in addition to this base limit, is set at $6,000 for those over 50. This regulation enhances the flexibility and opportunities for older employees to bolster their retirement funds, making it an important provision in retirement planning. Understanding these limits is crucial for payroll professionals to ensure compliance and to assist employees in maximizing their retirement savings.