15 Year of Service Catch-up ?

[Guest STLGiant]

the age 50 catch-up provides that if an employee has or will attain age 50 during the tax year, that the catch-up can be used. Is the same true for utilization for the 15 years of service catch-up? Can it be used in the tax year 15 years will be attained, or must one wait until the actual employment anniversary before utilizing this catch-up?

[Michael Devault]

To the best of my knowledge, this hasn't specifically been clarified. However, most practitioners that I know feel that the catch up is permitted to be used in the tax year when the 15 years of service is met.

The rationale is that a person could increase their elective deferrals to use up the additional catch up on the date that they reach 15 years of service. For example, if my 15th anniversary is September 1, I could then increase my deferrals to contribute an additional $3,000 for the balance of the year. Since it's all taking place in the same tax year, it would seem logical that I could simply increase my deferrals in January in order to contribute the same $3,000 over the entire calendar year.

Hope this helps.