457 Age 50 Catchup vs. Special Catch Up
Hello-
If a participant is eligible for both the age 50 catch up and the special catch up for the 457, the IRS says they cannot do both in the same year (correct me if I am wrong). How is that determined? When they make their election to contribute are they choosing between age 50 catch up and special catch up and once they have made a conribution under one they are out of luck until the next year?
Is there any reason to choose the age 50 catch up as opposed to just doing the special catch up?
Thank you!
Permalink Submitted by Alan - IRA critic on Mon, 2024-08-05 15:48
Since only one or the other can be used in a given year within 3 years of normal retirement, the participant should determine the total amount of unused prior deferrals, and if that figure exceeds the normal age 50 catch up limit (7,500 for 2024), the special catchup should be chosen as it will produce a higher max amount. Either the special or the age 50 catchup can be used in those 3 years, but not both.