457(b) Retirement Plan Catch-Up Rules & Limits
As part of a 457(b) plan, participants can contribute more than the annual limit once they reach a certain age. There are two types of these “catch-up” contributions: the Age 50 Catch-Up provision and the Pre-Retirement Catch-Up provision.
The Age 50 Catch-Up Provision for 457(b) Plans
From age 50, you can begin making additional contributions greater than the annual limit for your 457(b) plan.
See the catch-up limits for this year.
The Pre-Retirement Catch-Up Provision For 457(b) plans
The Pre-Retirement Catch-Up provision, also known as the special 457(b) catch-up, is used in the three years before your declared normal retirement age. It allows you to make additional contributions to your 457(b) plan to make up for years in which you didn’t contribute the maximum possible amount to your current plan. The amount you can contribute under this provision depends on the deferrals you previously didn’t make with your current employer’s plan. The total amount you can contribute can be up to twice the annual limit for the year in which you are making the extra contribution.
If you already have a MissionSquare plan and want more information on maximum amounts for previous years, plus a worksheet for working out catch-up contributions, see page 2 of MissionSquare’s Pre-Retirement Catch-Up form.
Example Of a 457(b) Pre-Retirement Catch-Up
John declared age 70, which he will attain in the year 2025, as his normal retirement age. He is eligible to make catch-up contributions in the three years immediately preceding the year of his NRA: 2022, 2023, and 2024.
Maximum Regular Contribution (2022-2024)
$66,000 = ($20,500 + $22,500 + $23,000)
Maximum Pre-Retirement Catch-Up Contribution (2022-2024)
$66,000 = ($20,500 + $22,500 + $23,000)
Maximum Total Contribution (2022-2024)
$132,000 = [$66,000 (regular) + $66,000 (catch-up)]
In order to make the maximum catch-up contribution of $66,000, John must complete the Unused Deferral Worksheet and show that he has at least $66,000 of unused deferrals for years when he was eligible to participate in his current employer’s 457(b) plan.
- Even though John is eligible to make catch-up contributions totaling $66,000 from 2022-2024, he is not required to do so. He might make catch-up contributions in 2022, and then his circumstances change and he ends up not making any catch-up contributions in 2023 or 2024. If so, he would still be eligible to take advantage of the age 50 catch-up provision in future years, but he would not be eligible to make pre-retirement catch-up contributions to this employer’s plan at any point in the future.
- Even though John has declared age 70 as his NRA, he is not prohibited from retiring before (or after) the date when he attains age 70.
457(b) Plan Catch-Up Rules
You must stay within the limits set by the catch-up contribution provisions. Further, you can’t make both the Age 50 and the Pre-Retirement contributions in the same calendar year.
You should therefore consider which option allows you to make the most contributions in a given year. (See the calculation sheet referenced above.)
How to Make 457(b) Catch-Up Deferrals
If you wish to make 457(b) catch-up deferrals, contact your plan sponsor, who will ask you to complete a form either on paper or online.
If you have additional questions about 457(b) catch-up deferrals, contact MissionSquare.