Catch-up contribution

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Catch-Up Contribution

Contributions to an IRA or a 401(k) over and above the maximum allowed otherwise. Account holders are allowed to make catch-up contributions if they are over 50 years of age. They were first allowed under the Economic Growth And Tax Relief Reconciliation Act of 2001 and are designed to let persons save more for retirement as they near retirement without being taxed.

Catch-up contribution.

You are entitled to make an annual catch-up contribution to your employer sponsored retirement savings plan and individual retirement account (IRA) if you're 50 or older.

The catch-up amounts, which are larger for employer plans than for IRAs, increase from time to time based on the rate of inflation.

You are eligible to make catch-up contributions whether or not you have contributed the maximum amount you were eligible for in the past. And if you participate in an employer plan and also put money in an IRA, you are entitled to use both catch-up options.

Earnings on catch-up contributions accumulate tax deferred, just as other earnings in your account do. And when your primary contributions are tax deferred, so are your catch-up contributions.

Health savings accounts (HSAs), which you're eligible to open if you have a high deductible health plan (HDHP), allow catch-up contributions if you're at least 55. Your eligibility to make any contributions to an HSA ends when you turn 65.

References in periodicals archive ?
Note: Catch-up contributions can be made by individuals age 50 and over if the plan allows.
Thereby, deferrals in excess of the basic 402(g) limit for any year in question are considered to be 15-year catch-up contributions until that limit is exhausted and then age-50 limit deferrals after that.
Catch-up contributions are additional tax-deferred contributions and are separate from regular TSP contributions.
The rule allows for up to $15,000 in catch-up contributions, but to qualify employees must have accrued at least 15 years of service.
For 2006, 401(k) and 403(b) plan participants, as well as traditional and Roth IRA participants who are age 50 or older at the end of the calendar year, are allowed to make catch-up contributions of up to $5,000.
The Economic Growth and Tax Relief Reconciliation Act of 2001 made many favorable changes to the IRC, such as catch-up contributions for workers age 50 and over, increased contribution limits and expanded rollover options.
[] Catch-up contributions. Employees who will reach age 50 or older by the end of the plan year can add a catch-up contribution of $5,000 to their 401(k) elective deferrals.
Catch-up contributions are not subject to other contribution limitations or any applicable nondiscrimination rules.
Once an employee who is 50 or older has deferred the maximum amount allowed under elective-deferral and annual-addition limits, catch-up contributions can be allowed in the plan.
For instance, 98% of those sponsors designate a qualified default investment alternative (QDIA); 97% offer target-date funds; 73% offer a Roth feature that enables participants to contribute on an after-tax basis; and 99% offer catch-up contributions that enable participants ages 50 and older to save an increased amount.
414(v)(2)(B)(i) dollar limit for catch-up contributions to an applicable employer plan (other than a plan described in Sec.
(Catch-up contributions do not count toward these limits.) Further increases, triggered by inflation adjustments in the consumer price index, may occur until the act sunsets in 2011.