401(k) Catch-up
Client is putting max of 15% (less than $15500) into his 401(k). He is over 50 and would like to take advantage of low Company stock prices before the election. Can he use the catch-up and put in another $5000, even if the total exceeds 15% of gross?
Permalink Submitted by Alan Spross on Tue, 2008-10-28 00:11
Al,
If the plan allows it, the IRS Regs does because the employee has already reached a plan imposed limit of 15%. The 15% is a typical plan imposed limit where the IRS allows 100% of salary, but not more than 46,000 in total contributions under Sec 415c.
Therefore, in most plans this employee would be allowed to make the full catch up contribution in this case, so the client should at least make the effort to pursue making this contribution. It must be done by payroll deduction, so client should get on this while enough pay periods remain.