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Understanding 401(k) Catch-Up Contributions: A Guide to Boosting Your Retirement Savings

Learn about Catch-Up Contributions (CUCs) for 401(k) plans - who's eligible, how to make CUCs, payroll deductions, W-2 reporting, employer matching, and treatment for loans and hardships. Contact Retirement Service Center for assistance.

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Understanding 401(k) Catch-Up Contributions: A Guide to Boosting Your Retirement Savings

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  1. Question & Answer401(k) Catch-Up Contributions

  2. What Is a Catch-Up Contribution (CUC)? …any elective deferral made by an eligible participant that is in excess of statutory limit, employer-imposed plan limit, or any limit applied in order for the plan to satisfy the ADP nondiscrimination test for the year | 2 |

  3. Who is Eligible to Make a CUC? Those 50 years of age and older this calendar year…however, regular plan contributions must reach annual deferral limit or annual ADP for Highly Compensated Employees (HCEs) | 3 |

  4. How Can I Make a CUC? Choose a deferral rate large enough to guarantee $22,000 throughout the year. HCEs may have a lower limit due to ADP testing restrictions. | 4 |

  5. Do the CUCs Have to be Made from Payroll Deduction? Yes. CUC must be paid by payroll deduction. | 5 |

  6. Does Employer Have to Match CUCs? No. Your Employer does not have to match. | 6 |

  7. Do I have to List Separately on W-2? No. The IRS has indicated that regular and catch-up contributions can be reported together on W-2 forms. | 7 |

  8. How are CUCs treated for Hardships and/or Loans? CUCs to a plan are treated for plan purposes as any pre-tax contribution would be. For example: CUCs would be 100% vested immediately, and treated as any other elective deferral when calculating available balances for loans | 8 |

  9. We hope you found this information helpful. Your Retirement Service Center248.620.8100

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