Age-50 Catch-up Contributions

[Guest koolkidd]

What are the chances of Congress extending the Age-50 Catch-ups after EGTRRA expires? What are the reasons for not raising the contribution limits for all employees at that time? Younger workers/savers are being treated unfairly -- talk about discriminating against NHCEs. If Gen X is a cohort of slackers, what are the legislators worried about? The extra hours they won't be working and the extra money they won't be saving?

[Tom Poje]

It would probably surprise a lot of people to actually go back and read the provisions of the law - the pension portion was just a small part of the tax changes. Thats how all this got passed. Tacked onto the tax bill which Congress wouldn't dare vote against.

In particular the pension changes were found under "Title VI -Pension and Individual Retirement Arrangement Provisions"

and this was divided up into subtitles (Very Brief descriptions)

A. IRAs

B. Expanding Coverage (Increased various limits)

C. Enhancing Fairness for Women - (This is the section that allowed catch-up contributions)

D. Portability for Participants (rollovers/hardships

E. Strengthening Pension Security

F. Reducing Regulatory Burdens

will Congress repeal all those provisions? I doubt it, though if the debt continues to grow anything is possible. Will they expand catch up provisions? I extremely doubt it. Is that discriminatory - well I guess you could call it that, but if the govt wants to give some extra savings to 'older folks' (those over 50) I don't see a problem with that.

[Guest koolkidd]

Thank you Tom

[Guest mmc]

As a "Catchup eligible participant this year," let me tell you about the "old days." Those of us "Catch up eligible" did not have 401(k) plans in our 20's. In fact, back in the day, the minimum age requirement was age 25 and the vesting was not as liberal, there was no top-heavy minimum, etc. Imagine being 40% vested after 4 yrs, or 25% vested after 5 yrs? Forget any substantial distribution from a defined benefit plan for a young person. I was at my first job for 2yrs.; received one ps contribution of $485 and was 0% vested when I left.

Those of us eligible for the catchup are doing just that, catching up on what we didn't have until our 30's.