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Practice Management

Catch up Contributions and Normal Retirement Age

Q. An employer’s HR committee invited a top hat group member who has one of the “named” positions to participate in a plan that became effective on Jan. 1. That person will be age 65 in 2019; the plan defines “normal retirement age” as 65.
This person would like to maximize their contributions, so they can defer $19,000 (the employer can, but does not intend, to fund employer contributions in the first year). The top hat group member also is interested in making the special catch up. Since this is the first plan year can she defer $38,000, twice the limit for the 2019 calendar year, and then next year not be able to utilize the special catch up?

A. The special three-year catch-up is for the three years before the year that they attain the normal retirement age. So if she turns 65 in 2019, the three-year period would have been 2016-2018 only.