If you are 50 or older, you can stash extra cash in both a 401(k) and IRA. By Kimberly Lankford, Contributing Editor January 15, 2007 Can you please clarify 2007 catch-up contributions for retirement accounts? Can I contribute $20,500 to my 401(k) AND $5,000 to my Roth IRA?You sure can. As long as you'll be at least 50 years old by the end of the year, you can invest up to $20,500 in your 401(k) as well as $5,000 in your IRA in 2007 (people younger than 50 can invest $15,500 in a 401(k) and $4,000 in an IRA in 2007). If you start making the extra contributions when you're 50, you really can catch up on your retirement savings, even in just 15 years. Invest $20,500 every year in a 401(k) starting at age 50, and you'll boost your retirement savings by about $600,000 by the time you're 65, if your investments return 8% per year (see our Adding to Your 401(k) tool). Because the 401(k) contributions are pre-tax, investing $20,500 per year will lower your paycheck by only about $15,000 if you're in the 25% bracket. The money grows tax-deferred until withdrawn in retirement. If you invest $5,000 in your IRA during those years, you'll amass more than $145,000 in 15 years. If your adjusted gross income is lower than $114,000 in 2007 (or $166,000 if married filing jointly), then you can contribute to a Roth IRA, which gives you tax-free money in retirement. Advertisement If you max out both your 401(k) and IRA starting at age 50 and your investments return 8% per year, you'll have an extra $745,000 in your retirement savings by the time you're 65 -- a great way to catch up in a fairly short time period, especially after your children get older and you're finally able to shift some of the money you had been saving for college every year into your retirement savings. Got a question? Ask Kim at email@example.com.