A:

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)

RELATED FAQS
  1. Who can make catch-up contributions?

    Learn when you become eligible for catch-up contributions to your IRA or your company's retirement plan, and find out about ... Read Answer >>
  2. What is the catch-up contribution limit for qualified deferred tax plans?

    Learn about statutory limits established by the U.S. Internal Revenue Service for catch-up contributions to deferred retirement ... Read Answer >>
  3. Can catch-up contributions be matched?

    Learn about how the specific terms of your retirement savings plan dictate how and when your employer may match your catch-up ... Read Answer >>
  4. Are catch-up contributions tax deductible?

    Learn the federal tax rules for contributions to 401(k), 403(b), SIMPLE 401(k) and IRA retirement plans before and after ... Read Answer >>
  5. How old do I have to be to make catch-up contributions?

    Learn about the rules and limitations for catch-up contributions for common retirement plans, such as 401(k), 403(b), IRAs ... Read Answer >>
  6. Are catch-up contributions included in actual deferral percentage (ADP) testing?

    Find out why catch-up contributions are not included in the ADP testing, and how the IRS uses non-discrimination tests to ... Read Answer >>
Related Articles
  1. Your Clients

    The Deadline for Catch-Up Contributions: April 18

    Those who want to maximize their retirement plan contributions can still make a prior-year contribution for 2015. Don't miss the April 18th deadline.
  2. Retirement

    5 Reasons You Should Take Advantage of 401(k) Catch-ups

    Most Americans don't have a enough saved for retirement, but when they turn 50, they have a second chance thanks to the 401(k) catch-up provision.
  3. Retirement

    457 Plan Contribution Limits in 2016

    Learn about the 2016 contribution limits for 457(b) retirement plans and how you may be eligible to make catch-up contributions up to twice the annual limit.
  4. Taxes

    How To Save More For Your Retirement

    The Economic Growth and Tax Relief Reconciliation Act of 2001 made it easier to prepare for the future. Will you be ready?
  5. Retirement

    Why are 401(k) contributions limited?

    Find out why contributions to 401(k) retirement plans are limited, including what the current contribution limits are and how limits encourage participation.
  6. Taxes

    Common Questions About Retirement Plans

    We offer some solutions for the individual taxpayer as well as the small business owner.
  7. Retirement

    It’s Never Too Late to Contribute to Your 401(k)

    Find out why it is never the wrong time to start contributing to a 401(k), even in your late 30s, 40s or 50s; discover how to maximize your savings at any age.
  8. Taxes

    401(k) And Qualified Plans: Contributions

    By Denise ApplebyA qualified plan may be funded by both employer and employee contributions. Contributions are mandatory for some plans and discretionary for others, but the limits on employer ...
  9. Savings

    6 Retirement Savings Tips For 45- To 54-Year-Olds

    Now is the time to kick savings into high gear. Find out how.
  10. Financial Advisors

    Alert! Last Chance To Max Out Your Retirement Plan

    The end of the year marks the last chance for savers to maximize contributions to their 401(k), 403(b) and other retirement savings plans.
RELATED TERMS
  1. IRA Plan

    A plan that individuals may establish to arrange and plan for ...
  2. Tax-Sheltered Annuity

    A type of annuity that allows an employee to make contributions ...
  3. Savings Incentive Match Plan For Employees Of Small Employers - SIMPLE

    A retirement plan that may be established by employers, including ...
  4. Catch Up Effect

    A theory speculating that, since poorer economies tend to grow ...
  5. 401(k) Plan

    A qualified plan established by employers to which eligible employees ...
  6. Independent 401(k)

    A 401(k) plan set up for an individual running a sole proprietorship ...
Trading Center