What is a catch-up contribution?
A. A catch-up contribution is an additional amount that may be deferred to the plan by participants who are age 50 or older. A participant may make a catch-up contribution if they are going to be age 50 by the plan year end. The catch up amount is $5,000 in 2008 and $5,500 in 2009. After 2009, this maximum may be adjusted for cost of living increases.
The most that can be contributed to your 403(b) account is the lesser of your limit on annual additions or your limit on elective deferrals. If you will be age 50 or older by the end of the year, you may also be able to make additional catch-up contributions. These additional contributions cannot be made with after-tax employee contributions. You are eligible to make catch-up contributions if: You will have reached age 50 by the end of the year, and the maximum amount of elective deferrals that can be made to your 403(b) account have been made for the plan year. The maximum amount of catch-up contributions is the lesser of $3,000 for 2010, or your includible compensation minus your other elective deferrals for the year. Note: if you have more than 15 years of Service, the limit on your elective deferrals is increased. Learn more about the “15-Year Rule” in Chapter 4 of Internal Revenue Service Publication 571. Internal Revenue Service Publication 571 provides more details on catch-up i
