457(b) Retirement Plan Catch-Up Rules & Limits

As part of a 457 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 Plans

From age 50, you can begin making additional contributions greater than the annual limit for your 457 plan.

See the catch-up limits for this year.

The Pre-Retirement Catch-Up Provision For 457 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 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 Pre-Retirement Catch-Up

Let’s say you declare 70 as your normal retirement age, which will be in 2023. You’d be eligible to make catch-up contributions in the three years immediately preceding that year: 2020, 2021 and 2022.

Your maximum annual contributions for those year total $59,000
($19,500 in 2020; $19,500 in 2021; and $20,500 in 2022).

Potentially, your maximum Pre-Retirement Catch-Up contribution is also $59,000

So, your maximum total contribution over those three years may be as much as $119,000.

To be eligible to make this maximum catch-up contribution of $59,500 you’ll need to show that you have at least $59,500 of unused deferrals for years you were entitled to participate in your current employer’s 457 plan.

Even though you are eligible, you aren’t required to make catch-up contributions totaling $59,500 from 2020-2022. You might make catch-up contributions in 2020, and then not make any catch-up contributions in 2021 or 2022.

If so, you would still be eligible to take advantage of the Age 50 Catch-Up provision in future years, but you wouldn’t be eligible to make Pre-Retirement Catch-Up contributions to this employer’s plan at any point in the future.

Even if you’ve declared 70 as your normal retirement age, you could decide to retire before (or after) age 70. If you do retire early, your catch-up contributions may be limited in the year you retire.

457 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 Catch-Up Deferrals

If you wish to make 457 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 catch-up deferrals, contact MissionSquare.

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