Retirement plan catch-up contributions
Retirement plan catch-up contributions have very specific rules and regulations. Use our insights to help your plan stay in compliance.
Know the rules. Stay in compliance.
Catch-up contributions have the ability to help participants grow their retirement savings through increased deferrals as individuals approach retirement age. While these provisions may be advantageous for plan participants, they could increase the administrative burden for the plan sponsor due to the requirements to perform certain catch-up calculations and to maintain service and contribution history.
The following examples describe optional catch-up provisions to consider permitting in your plan. Employers sponsoring multiple plans should be aware that plan contributions and catch-ups must be coordinated among certain plan types and should refer to their plan documents for any additional plan limits and available catch-up options.
Age 50 catch-up
Optional provision under 401(k), 403(b) and 457(b) governmental plans:
Participants who are at least age 50 may elect to defer up to an additional $6,000 (adjusted annually for cost of living). A participant is first eligible for the catch-up any time during the calendar year in which he or she reaches age 50. The catch-up is triggered once a participant meets the annual 402(g)/457 limit for the year or as a result of a plan-imposed limit. The catch-up also can be used to re-characterize refunds of failed nondiscrimination testing if the participant has reached age 50 and hasn’t fully utilized the catch-up amount for the applicable year.
15-year special catch-up
Optional provision only in certain 403(b) plans:
Qualified organizations (public school systems, hospitals, home health service agencies, churches, health and welfare service agencies, and a convention or association of churches) sponsoring a 403(b) plan may permit participants to defer up to an additional $3,000 each year if they meet certain service and contribution requirements. The total lifetime catch-up available with the current employer under this provision is $15,000.
Final 3-year catch-up
Optional provision under 457(b) governmental and 457(b) Top Hat plans:
Employers who offer 457(b) governmental and tax-exempt plans may permit participants to defer amounts above the annual deferral limit in the three calendar years prior to the attainment of normal retirement age, as stated in the plan document. The purpose of the final 3-year catch-up is to allow participants who didn’t fully fund contributions to the plan in prior years to make additional deferrals to the plan.
Learn more about retirement plan catch-up contributions, including examples and current limits. Download the full article (PDF) .