Catch-Up Provisions May Help You Invest More

If you're getting close to retirement but feel like you need to invest more, learn about the catch-up contributions that may be available to you. Keep in mind that investing involves market risk, including possible loss of principal.

Ways to catch-up

Participants younger than 50 years old may defer as much as $18,000, or 100% of the employee's includible compensation in this calendar year for his or her most recent year of service (whichever is less), to a 457(b) plan, and an additional $17,000, or 100% of the employee's includible compensation for his or her most recent year of service (whichever is less) to a 401(k) or 403(b) plan – which may be up to a combined total of $34,000.

If you're at least age 50 and eligible, there are catch-up provisions that allow you to contribute more than the standard annual deferral limits. Catch-up provisions are tax-deferred until withdrawal when they're taxed as ordinary income. Distributions made prior to 59½ may be subject to a 10% penalty tax. All taxable distributions at any age are subject to ordinary income tax, and surrender charges may apply.

  • Age 50+ Catch-Up – In a tax year when you're 50 or older and are actively employed, you may possibly be able to defer up to $5,500 over the normal deferral limit (in 2012, as much as $17,000 or 100% of the employee's includible compensation for his or her most recent year of service – whichever is less) to your 457(b), 401(k) and/or 403(b) plans – which may be up to a possible combined total of $45,000.
  • Special 457(b) Catch-Up – If you're within three years before the year you will retire, you may possibly be able to defer as much as $34,000 to your 457(b) plan – and $22,500 to your 401(k) or 403(b) plan – for a possible combined total of $56,500.

Get the help you need

Read more details and rules for Catch-Up Provisions (PDF).

Talk with one of our Team MSRP Retirement Specialists for more information about catch-up contributions. Neither Nationwide® nor our representatives offer tax or legal advice. Consult your own counsel before making any decisions.

PDFs require Adobe® Reader®

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