Retirement, Investments, & Insurance for Individuals Build your knowledge Catch-up contributions: Who can make them and how do they work?
Catch-up contributions: Who can make them and how do they work?

Catch-up contribution increases for 2023 help give you flexibility to save more for retirement.

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2 min read |

Owning a home, raising children, paying for unexpected surprises—it’s easy for retirement savings to fall short. But, fortunately, it’s never too late to reach your retirement savings goals.

In fact, after age 50, your retirement plan may allow you to make catch-up contributions. If you’re able to meet the regular contribution limit, catch-up contributions let you save more, either in your IRA or your organization's retirement plan (if applicable).

2023 catch-up contribution limits

In 2023, if you’re still working, you can make a maximum annual contribution of $22,500 to your employer’s retirement plan.1 And if you’re age 50 or older, you may be able to make an additional catch-up contribution of up to $7,500.*

Common catch-up contribution limits include:2

Annual contribution limit $22,500
Catch-up contribution* $7,500
Total contribution $30,000
Individual retirement account (IRA, traditional & Roth)
Annual contribution limit $6,500
Catch-up contribution* $1,000
Total contribution $7,500
Annual contribution limit $15,500
Catch-up contribution* $3,500
Total contribution $19,000

To be eligible for catch-up contributions in any given year, you first must meet the maximum annual contribution IRS limit, or the max for your organization's retirement plan (if it includes a catch-up provision).

Using catch-up contributions to maximize retirement savings

If you're 50 or older, the catch-up provision can provide a great opportunity to contribute more to your retirement savings. This is especially true if you haven't always been able to contribute the maximum amount in the past. The pre-tax contributions also allow you to reduce your current taxable income even further.

Other ways to boost retirement savings

While making catch-up contributions is important, increasing the amount you're saving through a lump sum amount like a catch-up contribution may not always be feasible. Another way? Incremental increases in your contributions—even 1% at a time—throughout the year.

Here’s how that could work. Let’s say you start saving at age 30, putting away 4% from your yearly salary of $30.000. That equals $1,200 in retirement savings that first year. Each year, your salary increases by 3%, and you also increase your retirement savings by 1%. After 11 years, you’re now saving 15% and $6,229 a year for retirement.

What a 1% yearly retirement savings increase looks like

Catch up contribution graph

Screen shot of the retirement wellness planner calculator

Have a retirement goal in mind? Estimate the contribution per paycheck you need to make using the Retirement Wellness Planner.

What's next?

Log in to to assess your retirement savings rate. Don’t have an employer-sponsored retirement account? We can help you set up your own retirement savings.

* Some plans may not allow catch-up contributions to the plan.

** Simple IRA and Simple 401(k) plans are typically available to employers with 100 employees or less.

1 Contributions are limited to the lesser of plan or the IRS limit as indexed.

2 IRS.

The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment or tax advice. You should consult with appropriate counsel, financial professionals, and other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.