Catch-up contribution form

[stephen]

Does anyone have a catch-up contribution form they will share?

Thank You

[Mike Preston]

With the proposed regs written as they are, there is really no specific need for a catch-up form. The plan, and the participant, determine whether a catch-up contribution was made on a retroactive basis, after all is said and done.

About the only thing you need to do is allow the participant to elect the higher annual limit ($12,000 in 2002) only if when 50 is added to their birthyear you end up with the current year (or sooner). Hence, if birth is in 1952 or earlier in 2002, go for it.

[Guest PAL100759]

I'll admit to being totally confused about how to implement the catch-up provisions. However, I don't agree entirely with Mike. I believe that unless your plan limit is 100% of pay (and I don't know of anyone who has put in a plan limit over 60%), you will need to have some type of election form. Otherwise, how will a lower paid employee (who won't hit the $11,000 limit) be able to elect catch-up contributions in excess of the plan limit.

For example: Let's say the plan limit is 50% of compensation. You have a part-time employee who will make about $10,000 during the year, is age 51, and wants to maximize their savings under the plan. Wouldn't you need a separate election from this employee in order to take the additional 10% catch-up contribution? Perhaps I'm missing something.

PAL

[Mike Preston]

You are correct. I should have said that you need to allow the eligible employees the options of contributing not only in excess of the 402(g) limit, but also in excess of the plan limits.

If your election form doesn't state the specific plan limits, however, and instead references the SPD, then the form needn't be changed. If it does, I agree that the form should probably be modified.