Prop. Regs. issued on age 50 "catch-up" deferrals for Sec. 401(k), 403(b) and other plans.

• Jurisdiction: United States
• Author: Kautter, David J.
• Date: 01 January 2002

The IRS issued proposed regulations on Oct. 23, 2001, explaining retirement plan "catch-up" contributions made by individuals age 50 and over as provided in Sec. 414(v) (added by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA)). In general, the proposed regulations apply to catch-up contributions in tax years beginning in 2002.

Plans Eligible to Offer Catch-Up Contributions

The following types of employer-sponsored plans are the primary vehicles to which catch-up contributions may apply:

* Sec. 401(k) plans;

* Sec. 403(b) annuity plans;

* Sec. 457 eligible governmental plans;

* Savings incentive match plan for employees (SIMPLE) IRA plans; and

* Simplified employee pension (SEP) plans.

Age 50 Requirement

Only participants age 50 or over may make catch-up contributions. A participant projected to reach age 50 before the end of a calendar year is deemed to be age 50 as of January 1 of such year.

Determination of Catch-Up Contributions

Elective deferrals that exceed any "applicable limit" are treated as catch-up contributions to the extent they do not exceed the catch-up contribution dollar limit.

Applicable limits. Catch-up contributions are determined by reference to three types of plan limits:

1. A...