When you are over 50, you get an additional allowance for the amount that you can contribute to 401k - in addition to the usual limit of $ 18500 (in 2018), you are allowed to contribute $ 6000 of 'catch-up' contribution.

Question: when contributing, does it matter at any time which part of the contribution is 'normal' and which part is 'catch-up'?

Aside from potential tool / input limitations at specific employers, do I have to specify and remember to which part I contributed what?
For example, when I contribute the whole catch-up in Jan, and then change employer in Jun, I wouldn't be allowed to declare more 'catch-up' at the new workplace, but just 'normal' contributions?

Or does the catch-up rule simply raise the personal annual limit, and the IRS doesn't care about the parts?

  • Do you have an example where it could mathematically make a difference which part you call what? – Kevin Jul 13 '18 at 22:46
  • If I contribute $ 12500 normal, and from two jobs $ 6000 'catch-up' (each), I am at a total of $ 24500. The question is, is that ok, or am I in trouble for overcontributing to the 'catch-up' part of it? – Aganju Jul 13 '18 at 22:53
  • Assuming you could specify, if you know the catch-up limit is $6k, and you contribute all $6k catch-up at one job, why on earth would you contribute another $6k to catch-up at another job? It's not $6k/job, it's $6k/year. – Kevin Jul 13 '18 at 23:02
  • Yeah, what @Kevin said - when you do your taxes, they're going to see an overage. Then if you don't take it out by April 15 of next year, you're in penalty land. Been there; done that (employer allowed more than the annual limit). Amended returns etc etc. – Aaron D. Marasco Jul 13 '18 at 23:03
  • Anyway, not sure if the wording is functionally identical to the IRS, but Investopedia says "the IRS allows 401(k) participants who are age 50 or older to make additional contributions once they have maximized the standard contribution limit" (emphasis mine). So no, you can't contribute $6k catch-up and $12500 normal as you suggested. – Kevin Jul 13 '18 at 23:05

Question: when contributing, does it matter at any time which part of the contribution is 'normal' and which part is 'catch-up'?

You have no control over which part is which. From the IRS:

Elective deferrals are not treated as catch-up contributions until they exceed the limit of $18,500 in 2018…

With respect to multiple employers, the IRS says you can make your excess contribution even in a plan that doesn't handle it directly:

If you participate in plans of different employers, you can treat amounts as catch-up contributions regardless of whether the individual plans permit those contributions. In this case, it is up to you to monitor your deferrals to make sure that they do not exceed the applicable limits.

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