What is the catch-up provision in a Section 457 plan?
Unlike most other retirement plans, Section 457 plans have a “catch-up” provision that allows workers within three years of retirement to make larger contributions to supplement the smaller contributions they may have made earlier. In essence, the catch-up provision waives the standard annual limits on contributions. Instead, during the three years preceding retirement, the worker is allowed to contribute up to $15,000 annually into a Section 457 plan. To qualify, the employee must have contributed less than the maximum in previous years. A year-by-year calculation must be completed to determine the exact amount of catch up an employee is entitled to make.
