What is the catch-up contribution limit for individuals aged 50 and over for a 401(k) in 2023?

The catch-up contribution limit for individuals aged 50 and over for a 401(k) in 2023 is indeed $7,500. This provision is designed to help older workers who may feel they need to boost their retirement savings in the years leading up to retirement. The standard contribution limit for a 401(k) is set at $22,500 for 2023, and those aged 50 and over are permitted to contribute an additional amount, which is the catch-up contribution.

This catch-up provision acknowledges that individuals nearing retirement may not have accumulated sufficient savings and provides an opportunity to enhance their financial security in retirement. Understanding the specifics of these contribution limits is essential for effective retirement planning, as they can significantly impact the total amount saved by individuals in preparation for their retirement years.