Ever heard of "life-time catch-ups" or "Special Election A"

[doombuggy]

I have the financial advisor of a plan owner/trustee/participant calling asking me about this person being able to possibly contribute an additional $15k over the next 5 years as a "life time catch-up" contribution (this is in addition to the 402(g) and $2k catch-up that she may make this year). He also mentioned a "special election A," also called "year of seperation of service limit," that allows additional contributions.

The company is non-profit and has a 2 year old 401(k) plan. They formally had a 403(b), I believe, that was not administered by us. I have never heard of either of these two items that the finacial advisor has mentioned. Am I out of the loop? Can anyone shead some light on the subject for me? He also mentioned publication 571, which I am going to look for now.

Thanks for your help, guys!

[Guest duh]

The catch ups and special elections are old 403(b) terms. Back in the day, 403(b) plan participants had an annual "mea" - maximum exclusion allowance done to determine how much they could contribute for the next year and whether they were able to utilize any of the catch-up provisions. For people who started saving late, they had lifetime catch-ups. When you were approaching retirement, you also had a one-time special election. I think there were three - A, B & C. These were in addition to the other contributions. One of them was for the last three years of employement and another let you defer almost half your salary in your final year.

[david rigby]

You can get IRS Publication here: http://www.irs.gov/pub/irs-pdf/p571.pdf

or by calling 1-800-tax-form.

See the first paragraph on the front page: the maximum exclusion allowance (MEA) has been repealed.

[mbozek]

Under IRC 402(g) participants in a 403(b) plan who have at least 15 years of service with an eligible employer, e.g. a hospital, can contribute an additional 3k for a maximum of 5 years. See Publication 571 which can be downloaded from the IRS web site. If it is an eligible employer, the np could install a 403(b) plan which would permit the employees contribute an additional 3k on top of the contributions made to the 401k. By the way why did the employer change to a 401k plan? Since 403b plans are not subject to any ADP testing, a maximum contribution of 17k can be contributed to the 403(b) plan in 2003 (19k in 04) by any HCE regardless of whan the non hces contribute. The special elections were repealed after 2001.

[doombuggy]

Thanks for everyones replys. I did read the publication this guy mentioned, and saw that it applied to 403(b)s, which this is not.

I don't know why they decided to switch (or for all i know, they still have the other plan). I'm just the little guy aka the tpa.