Definition
A catch-up contribution is an additional elective deferral that a participant aged 50 or older can make to a defined contribution plan above the general annual contribution limit, with a further elevated limit for participants in a specified older age range under changes enacted by SECURE 2.0.
Why it matters
Elective deferrals to defined contribution plans are subject to an annual dollar limit that applies uniformly across all participants. The catch-up contribution rules provide statutorily elevated limits for participants in later working years, on the premise that participants in the pre-retirement window may need higher contribution capacity to close accumulated shortfalls against retirement income targets. Under SECURE 2.0, a second elevated limit applies for a defined older age range, and Roth treatment of catch-up contributions is required for participants above a stated compensation threshold.
How it works
Section 414(v) of the Internal Revenue Code authorizes catch-up contributions above the general limit under section 402(g) for participants aged 50 or older by year-end. The base catch-up limit is indexed and stated annually by the Internal Revenue Service. Under SECURE 2.0, a further elevated catch-up limit applies for participants who reach ages 60, 61, 62, or 63 during the calendar year, equal to the greater of $10,000 or 150 percent of the regular catch-up limit for the year (with the base and elevated dollar figures subject to annual cost-of-living adjustment). Under the Roth catch-up mandate at section 603 of SECURE 2.0, participants whose wages from the sponsoring employer in the prior year exceeded a stated threshold (initially $145,000, indexed) must have their catch-up contributions treated as Roth contributions rather than pre-tax deferrals.
In practice
For a participant reaching age 50, the practical fact is that the annual contribution limit is now higher by the catch-up amount, and the participant can adjust the contribution election to capture the elevated limit. For a participant reaching age 60, the additional elevation under SECURE 2.0 further raises the limit for the four-year window ending after the year of age 63. A professional advising on catch-up contributions coordinates the contribution schedule with the participant's marginal tax rate profile — particularly relevant where the Roth catch-up mandate applies — and with any employer match structure, since matching contributions typically apply only up to the general limit. Plan sponsors administering catch-up provisions verify the participant's age eligibility, apply the Roth treatment where the compensation threshold requires it, and reflect the elevated limits in payroll and recordkeeping systems.
Related terms
- Elective deferral
- Section 402(g) limit
- Roth catch-up
- SECURE 2.0 Act
- Age 50 catch-up
- Age 60–63 elevated catch-up
- Contribution rate
- After-tax realized value