401k Catch-up Contributions

[JerT]

Hi,

I'm older than 50 and have never made a catch-up contribution to my 401k. Can I make one every year from now on? To make the catch-up, can I simply keep contributing to the 401k weekly as I do now until I reach $25,000?

[Lou S.]

If your plan allows for catch-up contributions yes you can contribute up to $25,000 in 2019. If payroll stops you at $19,000 talk to someone in HR as to why you were stopped.

[JerT]

1 minute ago, Lou S. said:

If your plan allows for catch-up contributions yes you can contribute up to $25,000 in 2019. If payroll stops you at $19,000 talk to someone in HR as to why you were stopped.

Thank you Lou. I have not been stopped at 19k. Just wondering if the catch-up needed to be one payment at the end of the year, or if I can just keep the weekly contributions going until I hit 25k.

Do you know if I can make these catch-up contributions every year now?

[Mr Bagwell]

Yes, catch-ups are available each year for those 50 and older.

Any chance you are a Highly Compensated Employee?  You had compensation greater than 120,000 in 2018 and/or greater than 5% owner in said company that you are deferring?

[Lou S.]

They can be weekly. Yes you can make the catchup every year starting in the year you reach age 50. The catchup limit like the 401(k) limit is indexed for inflation.

Until t hey change the law that is.

[JerT]

1 hour ago, Lou S. said:

They can be weekly. Yes you can make the catchup every year starting in the year you reach age 50. The catchup limit like the 401(k) limit is indexed for inflation.

Until t hey change the law that is.

Great. Thanks again.

[JerT]

1 hour ago, Mr Bagwell said:

Yes, catch-ups are available each year for those 50 and older.

Any chance you are a Highly Compensated Employee?  You had compensation greater than 120,000 in 2018 and/or greater than 5% owner in said company that you are deferring?

Yes, I am an HCE.

[david rigby]

At the risk of stating the obvious, please review the plan's Summary Plan Description for discussion about catch-up availability.

[Tom Poje]

you indicated you were an HCE.

'have you ever had a corrective distribution due to a failed ADP test?'

e.g. if you received $1000 in corrective distribution, then that implies you have already used up the catch up, as catch ups are one way of leaving $ in the plan for a failed test.

[JerT]

36 minutes ago, Tom Poje said:

you indicated you were an HCE.

'have you ever had a corrective distribution due to a failed ADP test?'

e.g. if you received $1000 in corrective distribution, then that implies you have already used up the catch up, as catch ups are one way of leaving $ in the plan for a failed test.

Hi, no corrective distribution. Its a small firm with just HCEs. Other than top heavy issues, I assume there are no catch-up limits for HCEs (other than 6k)?

[Tom Poje]

correct. and it looks like next year the catch up limit goes up $500.

If they pass the Secure Act then age 60 and up would have a larger catch up as well.

[CuseFan]

and these must be done thru payroll withholding based on deferral election you made before the pay became available to you - i.e., you can't "write a check" at year-end for your catch-up contribution (unless you're self-employed like a partner in a partnership).

[Mr Bagwell]

Tom had my back on this one as I was off for the July 4th holiday.....

I was thinking that I would tell you to defer as much as you could to the maximum and see where the testing shakes out for 2019.  If no refund, then get to the maximum again for 2020.