Plan Document limits deferrals to 50% of compensation

[Pammie57]

If a plan document limits deferrals to 50% of compensation, and a participant makes $36,000 but is catch-up eligible - and wants to contribute the max she can - would she be able to defer 18000 plus the 6000 for catch up or would she be

limited to just 18,000 for 2015?

[My 2 cents]

At the risk of sounding trite, does the plan document address this point? Being able to contribute the maximum plus a catch-up is covered by the applicable statute and regulations, but the plan has a limit lower than the statutory one. I would suspect that the plan imposes a limit of 50% of compensation without reference to catch-ups so the answer would be $18,000, but I don't work with defined contribution plans.

[ETA Consulting LLC]

You're right, but missed a point. The statutes (and the plan language) would require the catchup be made universally available. Hence, there is no plan override for the ability of each individual to make the catchup (when the plan actually has a catchup provision).

So, the plan should have language (maybe in the BPD) that says whatever the limit imposed by the plan, the participant will be allowed a full catchup amount if the plan actually allows catchup.

In other words, when the plan allows catchup, the plan must allow each and every participant age 50 or above the opportunity to take advantage of their full catchup.

Good Luck!

[BG5150]

Side note: has anyone seen a plan that DIDN'T allow catch up? What was the reasoning behind it?