curious question about catch up

[K2retire]

If a plan has never been updated to allow catch up contributions, can you still reclassify a possible ADP refund as catch up for participants in that plan?

[Tom Poje]

I don't see how that would be possible, unless perhaps the company had a second plan that permitted catch-up, because of the universal availability rule, and then it would be required to have them.

I'm always surprised when I hear a plan not allowing such a feature like this, though I see about 3% still don't (though maybe with restatements this has dropped)


How many retirement plans offer this feature?
According to the Plan Sponsor Council of America (www.psca.org), 97.1% of all 401k plans permit catch-up contributions.
Are we required to provide this additional elective deferral to our plan participants?
No, a plan is generally not required to provide for catch-up contributions.
If we want to offer the catch-up provision, does our plan have to be amended?
There is a high likelihood that your plan will need to be amended in order for you to allow catch-up contributions. The IRS has provided model amendment language that can be used, but you should immediately check with your legal counsel or recordkeeper on what your specific plan needs.
http://www.401khelpcenter.com/catch-up_contributions.html#.V4-g6rgrJaQ

[Kevin C]

If a plan has never been updated to allow catch up contributions, can you still reclassify a possible ADP refund as catch up for participants in that plan?

Are you talking about a late amender? Or, a plan that was timely updated, but doesn't allow catch-ups?

[K2retire]

If a plan has never been updated to allow catch up contributions, can you still reclassify a possible ADP refund as catch up for participants in that plan?

Are you talking about a late amender? Or, a plan that was timely updated, but doesn't allow catch-ups?

The plan was updated, but the plan sponsor chose not to allow catch ups. I can't for the life of me figure out why they don't want to allow them.

[Kevin C]

If the sponsor chose not to allow catch-ups, there are no catch-ups. If they want catch-ups going forward, they would need to amend the plan. With the universal availability rules, I don't see how you could add them retroactively.

[Tom Poje]

if by chance you had 2 plans, one permitting catch ups and the other not, then you clearly violate the universal availability rule. agree you can't correct retroactively, but now I think you have other issues, and I'm not sure how you correct that violation. probably VCP of some type