Separate Catch up election required?

[Guest jefe96]

Is there any regulatory requirement that a catch up eligible participant needs to make a separate election to have salary deferrals count as catch up? We currently have employees complete 1 salary reduction agreement with 1 deferral election. This election is then in place for the plan year and will continue until they meet the 402(g) limit and then our payroll system will continue deductions until they hit the $5,000 catch up limit (if over 50). Someone is telling me that we need to have catch up eligiblel ee's complete another reduction agreement and make a separate election for catch up. It's my understanding that salary deferrals are salary deferrals whether they are normal deferrals or catch up deferrals. Our plan matches all deferrals, normal and catch up.

[Bill Presson]

Is there any regulatory requirement that a catch up eligible participant needs to make a separate election to have salary deferrals count as catch up? We currently have employees complete 1 salary reduction agreement with 1 deferral election. This election is then in place for the plan year and will continue until they meet the 402(g) limit and then our payroll system will continue deductions until they hit the $5,000 catch up limit (if over 50). Someone is telling me that we need to have catch up eligiblel ee's complete another reduction agreement and make a separate election for catch up. It's my understanding that salary deferrals are salary deferrals whether they are normal deferrals or catch up deferrals. Our plan matches all deferrals, normal and catch up.

There is no requirement for a separate election.

[JanetM]

Just to play devils advocate, they can max out deferrals and make catch up without getting to 402g limit. Say the plan limits deferrals to 20%. Person making $50k maxes out at $10 and can still make the $5,000 catch up.

I agree with Bill, there is no need to make separate election. But depending on how the payroll system works and your record keeper you may want/need separate election.

[Bird]

But depending on how the payroll system works and your record keeper you may want/need separate election.

I don't doubt that there are p/r companies requiring this, but it's unnecessary at best. Catchups are determined by exceeding some limit, not by a participant's election (!). The most common limit to be exceeded is, I would guess, the 402(g) limit, and I CAN imagine a p/r company wanting an election because they don't know anything about plans, but I can't imagine any GOOD reason why a participant would have to make an election to make contributions over that limit if they are catch-up eligible.