Catch-Up Contributions

Hello everyone,

I appreciate your feedback to confirm my understanding of the interplay between the 402(g) and 415 limit with respect to catch-up contributions. I have a catch-up eligible participant who deferred $24,960 for 2021. Of this amount, $5,460 is considered a 402(g) catch-up. I believe I'm allowed to re-characterize the remaining $1,040 as a 415 catch-up correct? If so, the allocation for 2021 would be as follows:

1. Deferral: $18,460

2. Catchup: $6,500

3. Match: $11,232

4. Profit Sharing: $28,308

5. Total Annual Additions: $64,500

In order for our valuation software to do this calculation requires me to over-ride the participant's 415 limit, so I'm reluctant to do so unless I know for certain that my reasoning is correct. Thank you!

You are correct, when you allocate the employer contributions, you will re-characterize the $1,040 to catch-up.  

What software are you using?  I'm not a fan of overrides, most systems will either re-characterize it for you or have a function you would use to trigger it yourself.

9 hours ago, RatherBeGolfing said:

I'm not a fan of overrides, most systems will either re-characterize it for you or have a function you would use to trigger it yourself.

I agree.  make sure that catch-ups are allowed in the plan specifications (or whatever its called in your program).

Are you using an in-house program, or a commercial one?  If the latter, contact their support and they should be able to set you straight.