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April 26, 2020

Catch-up Contribution

Your Guide

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Definition

An additional contribution that can be made to a retirement plan by a participant who is at least age-50 by the end of the year for which the contribution is being made.

The following are the catch-up contribution limits, as already announced, for the types of plans for which they are allowed:.

Year

Traditional and Roth IRA Catch-up contribution limit

401(k), 403(b) and 457(b) Catch-up contribution limit

SIMPLE IRA and SIMPLE 401(k)

2007

$1,000

$5,000

$2,500

2008

$1,000

$5,000

$2,500

2009

$1,000

$5,500

$2,500

2010

$1,000

$5,500

$2,500

2011

$1,000

$5,500

$2,500

2012

$1,000

$5,500

$2,500

2013

$1,000

$5,500

$2,500

2014

$1,000

$5,500

$2,500

2015

$1,000

$6,000

$3,000

2016

$1,000

$6,000

$3,000

2017

$1,000

$6,000

$3,000

2018

$1,000

$6,000

$3,000

2019

$1,000

$6,000

$2,500

2020

$1,000

$6,500

$3,000

2021 $1,000 $6,500 $3,000

Referring Cite

IRC § 414(v) , Final Catch-up Regulations,

Additional Helpful Information

  • An employer is not required to provide for  catch-up contributions in its employer plan
  • An individual who participates in multiple 401(k) and or 403(b) plans are subject to an aggregate contribution limit that would apply as if they participated in one plan. For instance, the aggregate catch-up limit for 2007 is $5,000.
  • 457(b) plan limits are determined separately
  • An elective deferral that is treated as a catch-up contribution is not subject to otherwise applicable limits under the applicable employer plan and the plan will not be treated as failing otherwise applicable nondiscrimination requirements because of catch-up contributions. 
  • Catch-up contributions are not taken into account in applying the limits of section 401(a)(30), 402(h), 403(b), 408, 415(c), or 457(b)(2) (determined without regard to section 457(b)(3)) to other contributions or benefits under the plan offering catch-up contributions or under any other plan of the employer. 
  • Elective deferrals that are treated as catch-up contributions under a plan because they exceed a statutory limit or an employer-provided limit are disregarded for purposes of ADP testing.  These catch-up contributions are subtracted from the participant’s elective deferrals for the plan year prior to determining the participant’s actual deferral ratio.  This subtraction applies without regard to whether the catch-up eligible participant is an HCE or a nonhighly compensated employee (NHCE).  If a plan needs to take corrective action under section 401(k)(8), the plan must determine the amount of elective deferrals for HCEs that are catch-up contributions because they are in excess of the ADP limit and retain such amounts. The plan would not be treated as failing section 401(k)(8) because these excess contributions are treated as catch-up contributions and retained.
  • Catch-up contributions for the current plan year are not taken into account under section 416 or 410(b).  However, catch-up contributions for prior years are taken into account in determining whether a plan is top-heavy under section 416, and for purposes of average benefit percentage testing to the extent prior years’ contributions are taken into account (i.e., if accrued-to-date calculations are used).

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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