Catch-Up Contribution
 |
Definition of 'Catch-Up Contribution'A type of retirement savings contribution that allows people over 50 to make additional contributions to their 401(k) and/or individual retirement accounts. The catch-up contribution provision was created by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), so that older individuals would be able to set aside enough savings for retirement. |
|
Investopedia explains 'Catch-Up Contribution'Originally, the ability to make catch-up contributions under EGTRRA was set to end at around 2011. However, the Pension Protection Act of 2006 made catch-up contributions and other pension-related provisions permanent.Although using catch-up contributions is a great way for many people to expand their retirement savings, a report from the Vanguard Center for Retirement Research entitled "Catch-Up Contributions in 2004: Plan Sponsor and Participant Adoption" (2004) found that only 13% of eligible candidates use catch-up contributions to expand their savings. |
Related Definitions
Articles Of Interest
-
6 Retirement Savings Tips For 45- To 54-Year-Olds
Now is the time to kick savings into high gear. Find out how. -
6 Late-Stage Retirement Catch-Up Tactics
It's not too late, but if you want to retire comfortably you'll have to be aggressive. -
6 Ways To Maximize The Value Of Your 401(k)
From matching employer contributions to proper asset allocation, we'll tell you how to get the most out of your plan. -
Do I need to hit my 401(k) contribution limit before I can begin making catch-up contributions?
You generally need to reach the limit established by the plan in order to make catch-up contributions; therefore, if the plan limit is $15,500, you will be able to make catch-up contributions ... -
What types of plans allow catch-up contributions?
Catch-up contributions can only be made to plans with salary deferral features.If you want to make catch-up contributions, you will need to amend your profit-sharing plan to include a salary ... -
How To Start Saving For Retirement
If you establish these money-saving habits and patiently allow your wealth to build, you will be taking some huge steps forward in making your financial future more secure. -
An Introduction To The Keogh Retirement Plan
Learn more about this popular defined-contribution retirement plan that many business owners, proprietors, and self-employed people can benefit from. -
How To Buy Annuities (And When Not To)
Annuities are complicated products that require some basic homework to be done before requesting quotes. Retirees will want to think about how they envisage their lifestyle and even their potential ... -
How To Profit From Risk
CDs may look safe and attractive but considering most pay a rate that is less than the rate of inflation seniors today risk actually losing money with CDs. We need to be our own money managers ... -
Designations No Retirement Planner Should Be Without
Advance your career and gain clientele by adding a few choice certifications.
