415 limit with catch up

Please forgive this basic question, but I feel as if my brain has turned to mush ( I wish myself good luck making it until March 15th!!).

If an employee does not fully utilize the 401(k) catch up provisions, and defers a total of $22,500, then the 415 limit would be $55,000 plus $4,000 for a total of $59,000?

I just want to be sure that I should not be using the limit of $61,000.  I feel no since if a participant over age 50 does not defer at all is limited to $55,000, but feel the need to check.

Thank you to all those to whom this is second nature!!!

I'm not 100% sure of the situation but it is possible to have $6K of catchups here.  If you allocate $38.5K as PS, then you have total allocations of $61K and can determine that $6K of deferrals were catchup and $16.5K regular.  In other words the 415 limit is in fact $61K.  I like to say that we determine catchups (after some limit is reached), not the participant or the payroll company.

Likewise a participant cannot defer $6K and say it is all catchup (e.g. to improve ADP testing results).  If no limit is exceeded, it's not a catchup.

The 415 limit doesn't change - but catch-up contributions are not considered when applying the 415 limit.

You have deferrals of 22,500. That exceeds the 402(g) limit by 4,000, so 4,000 of that is reclassified as catch-up. The remaining 18,500 deferral continues to be counted as annual additions.

Then you make an employer contribution of 38,500. Add that to your 18,500 and you now have 57,000 in annual additions. This exceeds the 415(c) limit by 2,000 so 2,000 of your 18,500 deferral is reclassified as catch-up. So you end up with annual additions of 16,500 (deferrals) + 38,500 (employer) = 55,000 which satisfies 415, plus 4,000 (exceeded 402(g) limit) + 2,000 (exceeded 415(c) limit) = 6,000 catch-up contributions.

C. B. Zeller has the main point.  Stop thinking of the 415 limit as something that changes.  I see this kind of questions all the time when people say the 415 limit is $55,000 for under 50 year olds and $61,000 for over 50 year olds.  They seem to get confused what this person can do in terms of a maximum. 

No, the 415 limit is $55,000 and catch up doesn't count for that limit.  It sounds like I am saying the same thing but as your question and C,B's his answer show they aren't saying the same thing conceptually.  I think you will have less trouble in the future if you keep in mind the 415 limit is what it is and you then ask if I am over it are some of the deferrals catch up money. 

So, for participants over age 50, I automatically assume that the 415 limit is $61,000, and allocate a PS to bring them to this amount. 

Once this has been done, then I determine the amount of deferrals that were the base deferrals and the catch up deferrals.  I always thought that if deferrals were over $18,500, that base needed to be filled first, and I could not reduce the base, and increase the amount that was considered catch up.

I didn't realize that I could do this, as I thought I needed to take the base 415 limit then add the actual deferrals over $18,500 to come up with an adjusted 415 limit.

Thank you!

The timing of deferrals becoming catch-up depends on the limit that triggers the catch-up.  For 402(g)/401(a)(30), deferrals in excess of the deferral limit become catch-ups as they are deferred.  Catch-ups triggered by 415 or ADP testing become catch-ups at the end of the plan year.  The rules are in 1.414(v)-1.  There are mentions of timing in (b) and (c).

As C.B. pointed out, In your case, with $22,500 contributed in 2018, the last $4,000 of deferrals made in 2018 became catch-up when deferred.   Before the PS allocation at the end of the plan year, the participant still has $2,000 of the 2018 catch-up limit available.  When the PS allocation takes the participant to the 415 limit, the next $2,000 of PS causes $2,000 of the $18,500 of regular deferrals to be reclassified as catch-up.  The participant ends the year with $16,500 of regular deferrals, a PS of $38,500 and catch-up of $6,000.    

Be careful about assuming that everyone age 50 can get to $61,000 for 2018.  That only works for those who defer at least the full catch-up limit during the year.  Someone age 50 who doesn't defer can only get to $55,000.

1 hour ago, Kevin C said:

Be careful about assuming that everyone age 50 can get to $61,000 for 2018.  That only works for those who defer at least the full catch-up limit during the year.  Someone age 50 who doesn't defer can only get to $55,000.

And at risk of beating the dead horse this is just another reason to always start your thinking with the 415 limit is what it is and then next ask yourself are any of the deferrals at catch up.  That catches what Kevin is warning about vs thinking the 415 limit for a 50+ year old is the 415 limit plus catch up limit.