Off Calendar Year Catch Up Questions

Could we recharacterize catch-up contributions from the prior calendar year when there is unused catch up in the prior calendar year but not in the current calendar year?

For example plan year is 7/1/2025 - 6/30/2026,  Participant is catch-up eligible in 2025 and 2026.  He deferred $23,500 for calendar year 2025 (so no  catch-up in 2025 even though he was eligible), and he deferred $32,500 (used full catch-up limit) from 1/1/2026 to 6/30/2026.  Plan fails ADP test for PYE 6/30/2026.  Can $7,500 of the 2025 catch up be used to recharacterize excess contributions as catchup?

Thank you!

No, you cannot use the unused catchup from 2025 to recharacterize ADP refunds for the 6/30/2026 test. 

I believe in this case in the ADP test you would use the non-catchup deferrals from 7/1/2025 to 12/31/2025 (determined in 2025) plus the $24500 non-catchup deferrals from 1/1/2026 to 6/30/2026.  Only 2026 catchups can be used for recharacterization in the plan year that ends 6/30/2026.  You cannot go back and recharacterize 2025 deferrals as catchup to offset the refund.  Since the HCE already used the 2026 catchups there is no recharacterization of the excess deferrals from the ADP test.  Also I would make sure that, if all of the deferrals in 2026 were made as pretax, check to see if the HCE was also a Highly Paid Individual who should have made Roth catchups.