Catch up Match Calculation

[Guest Factster]

Plan permits a match contribution to the catch up contribution "in accordance with the formula specified in the adoption agreement."

If that formula is "50% of the participant's elective deferral which does not exceed 6% of the participant's compensation,"

What is the proper match for this participant?

Annual comp = $50,000

Elective Deferral = 10%

Match = 3%

Catch up contribution = 2%

Catch up match = ???

A. 1% (50% of 2% elective deferral)

B. 0% (max match is received because of elective deferral)

[Guest stryan]

I vote for "B";

[MWeddell]

In case you wanted another vote, "B" again.

[jsb]

Another vote for "B".

However, I'm not sure how "catch-up" contribution enters in. Even with the extra 2%, the employee has not yet reached the "normal" maximum contribution level.

[Guest dmj1998]

jsb - the example does not state the plan's max limit for EE deferrals. If the plan's limit is 10%, then a catch-up contribution is appropriate. If the plan's limit were something higher, like 15%, then a catch-up shouldn't need to be addressed. The catch-up provisions are intended to allow participants to exceed plan design limits as well as traditional legislative limits (ie, like 402g).