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

For individuals aged 50 and over, the catch-up contribution limit for a 401(k) plan in 2023 is indeed $7,500. This catch-up contribution allows older employees to save additional money beyond the standard contribution limit, which is designed to help them accelerate their retirement savings as they approach retirement age.

The Internal Revenue Service (IRS) sets these limits annually, and the catch-up provision is significant because it recognizes that individuals in this age range may want to enhance their savings as they prepare for retirement, often facing higher expenses and reduced time to accumulate wealth.

Understanding this contribution limit is essential for both employees looking to maximize their retirement accounts and payroll professionals who must provide accurate information about contribution limits and benefits to workers. In contrast, the other figures do not represent the 2023 catch-up contribution limit for a 401(k).