Frequently Asked Question
Do I need to hit my 401(k) contribution limit before I can begin making catch-up contributions?
You generally need to reach the limit established by the plan in order to make catch-up contributions; therefore, if the plan limit is $15,500, you will be able to make catch-up contributions only after you have reached that limit, assuming you will be at least 50 years old by year-end.
If the plan has a limit on your salary deferral contributions to 10% of your compensation and your compensation is $100,000, you would be eligible to make catch-up contributions after having reached the $10,000 limit.
However, it is important to note that qualified plans are not required to permit catch-up contributions, so the plan administrator or the summary plan description should be consulted to determine whether making catch-up contributions is even an option for you.
For more insight, see Retirement Savings Tips For 45- To 54-Year-Olds.
This question was answered by Denise Appleby
(Contact Denise)
If the plan has a limit on your salary deferral contributions to 10% of your compensation and your compensation is $100,000, you would be eligible to make catch-up contributions after having reached the $10,000 limit.
However, it is important to note that qualified plans are not required to permit catch-up contributions, so the plan administrator or the summary plan description should be consulted to determine whether making catch-up contributions is even an option for you.
For more insight, see Retirement Savings Tips For 45- To 54-Year-Olds.
This question was answered by Denise Appleby
(Contact Denise)
by
Denise Appleby
Denise Appleby is founder and owner of Appleby Retirement Consulting,which provides technical consultation, content, coaching, writing, editing and training services on related topics.
With more than 14 years of experience in the IRA and defined-contribution plans fields, Appleby has held several senior retirement-plan related positions with Pershing LLC, which included vice president of plans products and services, retirement plans manager, trainer, training manager, compliance consultant, technical help desk manager and writer.
With more than 14 years of experience in the IRA and defined-contribution plans fields, Appleby has held several senior retirement-plan related positions with Pershing LLC, which included vice president of plans products and services, retirement plans manager, trainer, training manager, compliance consultant, technical help desk manager and writer.
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