Helping Your Participants "Catch Up"

Helping Your Participants "Catch Up"

Catch-up today!

Catch-up contributions are an opportunity for eligible participants who are 50 years of age and older to make additional deferrals to their 401(k), 403(b) and governmental 457(b) plans.  Participants who are, or will become, age 50 during the calendar year are eligible to make catch-up contributions; however, at least one of four limits must be exceeded before amounts can be considered catch-up. The applicable limits are:

• The maximum dollar deferral limit ($19,000 for 2019; $19,500 in 2020)
• The annual additions limit, which is the lesser of 100 percent of compensation or the annual additions dollar limit (($56,000 for 2019; $57,000 in 2020)
• The plan’s deferral limit
• The actual deferral percentage limit for a highly compensated employee in a particular plan year

As your employees approach retirement, you should enhance their education and communication efforts. Information about catch-up contributions may help many plan participants better prepare for retirement. For more information about catch-up contributions and other topics for participants nearing retirement, visit the nearing retirement section of One Day is Today!