booster contributions?

[Guest le190]

What are 'booster contributions'? are they the same thing as 'catch-up contributions'? are 'catch-up contributions' still permitted? thanks.

[Guest Kelly R]

I would think any reference to "booster contributions" would be to QNECs or QMACs.

[Tom Poje]

I agree with the above - QNECs and QMACs are the only thing I have ever seen used as a booster contribution.

The only thing I have heard the term catch up referred to is a match. In particular, an 'extra' match at the end of the year. For example, plan matches

100% of the first 3% deferred. Company is putting in the match monthly. For the first 6 months an ee doesn't defer. For the last 6 months he defers 6%. If things are done strictlt monthly, he would only get 3% each of the last six months, so he needs a catch up to follow the terms of the document, which probably looks at the whole year when describing the match formula. but be careful, some documents do specify match by pay period as a formula.

[LCARUSI]

As I recall, the term "catch up contribution" was used in plans which allowed voluntary after-tax contributions. If the participant contributed less than 10% in a given year, he or she could catch up by making additional contributions in subsequent years (subject to current year 415 limitations).

I don't think this concept is applicable any longer

[Guest le190]

thanks for the input. so there is no such thing as a 'catch-up' 401(k) contribution...right? ex: a participant defers 5% for the entire year, and then decides in December to catch up to the 15% the plan allows. Permissible?

[LCARUSI]

That might be permissable assuming:

1) The plan doc allows contributions up to 15% of compensation, and

2) There is no specific language in the Plan that says the 15% limit applies to each payroll rather than to the overall annual comp.

You get into some grey areas with highly compensated emplyees (>$160k). If someone earning $20k per month contributes 1% of pay, he or she has contributed $1,600 after 8 months ($20kx8x1%). In other threads, members have opined that this person has hit the 401(a)(17) limit for the year and must stop contributing. I don't agree. I think this person can "catch up" by contributing $8,400 over the remainder of the year and still satisfy the requirement to be at less than 15% for the year (and to have not violated 402g or anything else).