keep it simple
Mar 9 2005, 03:39 PM
Could anyone provide a 'dummies' version definition of a 401(k) catch up provision?
Also, what are the contribution limits nowadays?
Thank you!
The 402(g) limit for 2005 is $14,000 and participants age 50 by December 31st are eligible to defer an additional $4,000.
The catchup contribution is not included in the 415 limit of $42,000 and it is not included in the ADP test.
That explanation is VERY basic.
Not trying to deviate from the "simple life", but there are three possible limits:
- 402(g) limit, mentioned above,
- plan imposed limit,
- limit reached via the ADP test.
The catch-up contribution "kicks in" at the lowest of these limits.
Blinky the 3-eyed Fish
Mar 10 2005, 11:07 AM
A 4th is the 415 limit.
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