The employer has a 403(b) Retirement Plan and allows catch-up contributions. We have a few employees that will turn age 50 in 2005, some turning 50 as late as December 2005. Am I correct to inform all participants turning age 50 in 2005 that he/she may contribute $18,000 beginning January 1, 2005? Am I correct that the regulations state "the additional pretax catch-up amount for employees who will be age 50 by the end of the taxable year may contribute the maximum dollar limits? Or does the regulations only allow the catch-up to begin in the month in which age 50 is attained? Many thanks to all for your feedback!

You can take advantage of the age 50 catch-up for the entire year during which you attain age 50 or older. Thus, if your 50th birthday is on December 31, 2005, you'll be able to take advantage of the catch-up for the entire calendar year 2005.

Hope this helps. Happy holidays!

There is also an older catch up provision that allows them to add an extra $3000.00 per year. For five years. It is not tied to their age, rather years of service where no contributions were made.

Is it the employer's 403(b) plan that allows it or is it the employee's chosen investment vehicle?

You might find yourself telling the employees something that might not be allowed as yet by a particular provider.