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When to Start Retirement Plan Catch-Up Contributions

You can can increase the amount you contribute anytime during the year you turn 50.

I’m turning 50 in July. Can I make catch-up contributions to my IRA now, or do I have to wait until after my birthday? And can I contribute the full extra amount this year, or do I need to pro-rate the extra contribution?

As long as you turn 50 by the end of the year, you can make the catch-up contributions anytime during 2013. And you don’t need to pro-rate the amount -- you can make the full contribution, regardless of when your birthday is.

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People age 50 and older in 2013 can contribute an extra $1,000 to their IRAs in 2013 -- bringing their total for the year to $6,500. You can also contribute an extra $5,500 to your employer’s 401(k), 403(b), 457 or Thrift Savings Plan -- for a total of $23,000 a year. The higher limits kick in at a time when many parents have finished paying the college bills, meaning there’s more money to set aside in a tax-advantaged account as retirement looms.

For more information about making the most of your 401(k), see Smart Ways to Boost Your 401(k). Also see our The Power of Boosting 401(k) Contributions tool for the impact the extra contributions can make on your retirement savings.

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If you have a health savings account, you can boost your tax-deductible contributions to the HSA by an extra $1,000 starting in the year you turn age 55 -- bringing your total to $4,250 for the year if you have individual coverage, or $7,450 if you have family coverage.

For more information about HSAs, see FAQs About Health Savings Accounts.

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