catch up contributions

[Guest joeplans]

What are the requirements for catch up. I have a group that two participants have maxed out for '04. Both are in excess of age 50 by Dec 04, but they have been told that the participant had to be age 50 by December 2001 to be eligible for make-ups, and no one else can take advantage of the catch-up provisions.

Any thoughts, code refs

thanks

[david rigby]

In general, a participant must be 50 by December 31 to make catch-up contributions any given year, not by 12/31/01.

[Guest buxbaum2]

Pax is correct.

According to IRC Section 219 5 (B):

(5) Deductible amount

(B) Catch-up contributions for individuals 50 or older

(i) In general In the case of an individual who has attained the age of 50 before the close of the taxable year, the deductible amount for such taxable year shall be increased by the applicable amount.

(ii) Applicable amount For purposes of clause (i), the applicable amount shall be the amount determined in accordance with the following table:

For taxable years The applicable beginning in: amount is: 2002 through 2005 $500 2006 and thereafter $1,000.

There is no reference to 12/31/2001. As long as the employee turns 50 before 12/31 in the taxable year, then they are eligilb efor catch up contributions.

Does your company have a "passive election" (where once the employee hits the 402(g) limt then the catch-up contributions are are taken out automatically as long as the employee is eligible) or does an election have to be specified by the employee?