Sometimes, life gets in the way of making retirement plan contributions. Whether it’s paying for a wedding, a new car or just unexpected expenses, you might not have saved as much as you could. If that’s the case, there’s still time. And, there are numerous ways to “catch up” on your retirement plan contributions, depending on your plan, age and profession.

Max out your traditional 401(k), 403(b) or 457 plan

For 2020, you can save up to $19,500 in a traditional 401(k), 403(b) or 457 plan. Your money goes into these plans pretax and is allowed to grow tax-deferred until you take the money out.

Save more if you’re age 50 or older

The government allows you to make additional contributions into your retirement plan each year if you’re 50 or older. For 2020, you can save an additional $6,500 in your traditional 401(k), 403(b) or 457 plan.

Use your Health Savings Account

If you signed up for a high-deductible health insurance plan, you may have access to a Health Savings Account, or HSA. An HSA is basically a savings account for health expenses that enables you to contribute money pretax. If you use the money for health-related expenses, you can take the money out without paying any taxes. In 2020, you can contribute:

  • $3,550 if you have individual coverage
  • $7,100 if you have family coverage
  • An extra $1,000 if you’re age 55 or older

Make additional elective deferrals to your 403(b) plan

If you’ve been an employee for a public school, hospital, home health, or health and welfare service agency or church for at least 15 years, you can contribute the lesser of:

  • $3,000,
  • $15,000, reduced by the amount of additional elective deferrals you made in prior years because of this rule, or
  • $5,000 times the number of years you’ve worked for that organization, minus the total elective deferrals made in prior years.

Here’s an example:

Dennis, age 50, has been a teacher at the local high school for 20 years. He hasn’t made any contributions to his 403(b) this year or in past years. He is therefore allowed to contribute:

$19,500 (the general limit)
+ 6,500 (the age 50+ catch-up)
+ 3,000 (the 15-year catch-up)

If you’re a government worker with a 457 plan, you may be able to add more 3 years before your normal retirement age.

If you have a 457 plan and haven’t contributed the maximum amount each year you were eligible for the plan, you can save more during the last 3 years before your normal retirement age — up to twice the standard limit of $19,500. To figure out how much you can contribute, you’ll need to know how much you didn’t contribute in past years.

Here’s an example:

Dolores, age 60, has worked for the police force for 30 years and has been eligible for a 457 plan the entire time. She has contributed $2,000 less than the maximum amount each year for 30 years, therefore she can make $60,000 in “preretirement catch-up contributions.” However, since she can only contribute twice the normal limit, or $39,000 each year in the last 3 years, here’s what she can do:

This year — 3 years before retirement:
$19,500 (the general limit)
+ 39,000 (her first “preretirement catch-up”)

Next year — 2 years before retirement:
$19,500 (the general limit)
+ 21,000 (her second and final “preretirement catch-up”)

Consult your tax advisor and financial professional

These numbers may change depending on current legislation, so make sure to talk to your tax advisor before making additional contributions, as well as a financial professional, who can help you explore these options in the context of a financial plan tailored to your individual circumstances, goals and time horizon.



Please be advised that this article is not intended as legal or tax advice.  Accordingly, any tax information provided herein is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer.  The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed and you should seek advice based on your particular circumstances from an independent tax advisor.

This informational and educational article does not offer or constitute investment, legal, tax accounting advice. Your unique needs, goals and circumstances require and deserve the individualized attention of your own financial, legal and tax professionals. Equitable Financial Life Insurance Company and its affiliates do not provide tax or legal advice or services.

GE-3230000 (09/2020) (Exp. 09/2022)

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