Catch-up contribution

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 ?
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.
How plan administrators can determine what is a catch-up contribution; and the treatment of catch-up contributions in the operation of the plan.
In a review of more than 3,000 defined contribution retirement plans, Transamerica Retirement Services found that more than 90 percent of employers adopted EGTRRA provisions for accepting rollovers and permitting catch-up contribution, while 67 percent chose to increase their plan deferral rates, allowing employees to contribute more of their compensation into their company-sponsored plan.
Take Advantage of Catch-Up Contributions - Beginning January 1, 2002, your plan may allow investors age 50 or older by plan year-end to make an additional $1,000 catch-up contribution in their 401(k)s.
Elective deferrals that exceed any "applicable limit" are treated as catch-up contributions to the extent they do not exceed the catch-up contribution dollar limit.
Limits for 401(k) and 403(b) plans increase to $11,000, with a $1,000 catch-up contribution.
Catch-up contributions are additional tax-deferred contributions and are separate from regular TSP contributions.
414(v)(2)(B)(i) dollar limit for catch-up contributions to an applicable employer plan (other than a plan described in Sec.
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.
Final regulations (35) relaxed the "universal availability" requirement, under which a controlled group cannot pick and choose which of its plans will allow catch-up contributions.
Best of all, the catch-up contributions will not count against the employer's deduction limit or against the employee's overall dollar limit.
We think these delays are due to the difficult economic conditions faced by most companies, and a desire for guidance on changes such as catch-up contributions and state tax nonconformity issues.