2016 401(k) Catch-Up Contribution
The 2016 401(k) Catch-Up Contribution is +$6,000.
Effective 2016-01-01Source: Notice 2015-75 (IRS)Verified 2026-09-01
Who it applies to
Participants aged 50 or over in applicable employer plans
What changed this year, and why
The catch-up contribution limit under IRC section 414(v) for participants aged 50 or over is $6,000 for 2016.
Common questions
- What is the catch-up contribution limit for 2016?
- For 2016, participants aged 50 or over may contribute an additional $6,000 as a catch-up contribution to an applicable employer plan, on top of the regular elective deferral limit.
- Who is eligible for the catch-up contribution?
- The catch-up contribution is available to any participant in an applicable employer plan who is age 50 or older by the end of the calendar year.
Your plan has to allow it, and you must turn 50 by year end
For 2016, the IRS allowed participants in 401(k) plans who were age 50 or older by the end of the calendar year to make additional catch-up contributions beyond the standard elective deferral limit. However, this benefit is not automatic—your employer's 401(k) plan must specifically permit these catch-up contributions. If the plan allows it, eligible participants could contribute an additional $6,000 beyond the basic deferral limit. The plan document controls whether this option is available to participants, so you need to check with your plan administrator to confirm that catch-up contributions are permitted under your specific 401(k) arrangement. Without explicit plan authorization, even participants who meet the age requirement cannot make these additional contributions.
Catch-up contributions. A 401(k) plan can permit participants who are age 50 or over at the end of the calendar year to also make catchup contributions.
Publication 560 (2016), Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (IRS)
The catch-up sits outside the overall contribution limit
A defined contribution plan's annual additions to a participant's account are subject to an overall limit. For 2016, total contributions and other additions (excluding earnings) cannot exceed the lesser of the participant's compensation or $53,000. However, catch-up contributions are not counted toward this limit at all. This means that a participant age 50 or older who has maxed out the regular deferral limit and then contributes an additional $6,000 as a catch-up does not have that catch-up amount counted against the overall ceiling. The catch-up sits entirely outside the annual additions cap, so it provides additional deferral room that does not compete with employer contributions or other plan additions. Without this rule, older workers who have not yet saved enough for retirement would be constrained by the same aggregate ceiling as younger workers and could not use the catch-up provision to build up additional savings before reaching normal retirement age.
For 2016, a de fined contribution plan's annual contributions and other additions (excluding earnings) to the account of a participant can't exceed the lesser of the following amounts. 1. 100% of the participant's compensation. 2. $53,000 ($54,000 for 2017). Catchup contributions (discussed later un der Limit on Elective Deferrals) aren't subject to the above limit.
Publication 560 (2016), Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (IRS)
Your pay can cap the catch-up below the stated limit
Even when a participant is eligible for catch-up contributions, the amount that can actually be contributed may be less than the full $6,000 catch-up limit. A participant's catch-up contributions for a year cannot exceed the lesser of two amounts: the catch-up contribution limit itself, or the excess of the participant's compensation over the elective deferrals that are not catch-up contributions. This means if a participant's pay for the year is low, or if they have already made substantial elective deferrals from other sources, the catch-up may be capped below the stated limit. The catch-up cannot create a situation where total deferrals exceed the participant's actual compensation for the year. This compensation-based cap ensures that catch-up contributions remain tied to actual earnings and do not exceed what the participant has available to defer.
A participant's catchup contributions for a year can't exceed the lesser of the following amounts. The catchup contribution limit. The excess of the participant's compensa tion over the elective deferrals that are not catchup contributions.
Publication 560 (2016), Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (IRS)
The plan document itself must enforce the deferral limit
The plan document itself must contain a provision that prevents employees from deferring more than the applicable limit for a particular year. For 2016 the basic limit on elective deferrals is $18,000. This limit applies to all salary reduction contributions and elective deferrals across all plans in which the employee participates. If the combined deferrals exceed the limit, the difference is included in the employee's gross income. The plan administrator is responsible for monitoring deferrals and ensuring that the plan's terms enforce this ceiling. When an employee works for multiple employers and participates in more than one plan, the employee bears responsibility for tracking total deferrals to ensure the aggregate does not exceed the annual limit, but each plan must still have its own safeguard in the plan document to prevent excess deferrals from being accepted in the first place. The plan cannot simply rely on the employee to self-police the limit.
Your plan must provide that your employ ees can't defer more than the limit that applies for a particular year. The basic limit on elective deferrals is $18,000 for 2016 and 2017.
Publication 560 (2016), Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (IRS)
What to do when you defer too much across two jobs
When an employee participates in multiple plans and the total of all deferrals exceeds the annual limit, the employee has an excess deferral. For 2016, if total deferrals exceed the limit, the employee can have the excess deferral paid out of any of the plans that permit these distributions. The employee must notify the plan by April 15, 2017, or an earlier date specified in the plan, of the amount to be paid from each plan. The plan must then pay the employee that amount, plus earnings on the amount through the end of 2016, by April 15, 2017. If the excess is withdrawn by April 15, it is included in the employee's gross income for 2016, but the earnings are included in income for the year distributed. If not withdrawn by the deadline, the excess is taxed twice and may be subject to additional penalties. The employee must take action to request the distribution and must coordinate across all plans where they participate.
If the total of an employee's deferrals is more than the limit for 2016, the employee can have the difference (called an excess deferral) paid out of any of the plans that permit these distri butions.
Publication 560 (2016), Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (IRS)
You do not elect a catch-up: your deferrals become one
Nothing on a payroll form is labelled catch-up. A participant makes one election - defer this much of my pay - and what it produces are ordinary elective deferrals until they pass a ceiling: the annual deferral limit, $18,000 for 2016, or the plan's own lower limit where it sets one, or the ADP test limit a plan is held to under the nondiscrimination rules. Whatever runs past whichever of those is reached first is what counts as the catch-up, up to $6,000 for 2016. Two things follow. Someone who defers less than $18,000 across the year never reaches the catch-up at all, however old they are, because there is nothing above the ceiling to reclassify. And someone who does reach it makes no second election to claim it: the reclassification is the plan administrator's arithmetic. The catch-up is the last money in, not the first.
Elective deferrals aren't treated as catchup contribu tions for 2016 or 2017 until they exceed the $18,000 limit, the actual deferral percentage (ADP) test limit of section 401(k)(3), or the plan limit (if any).
Publication 560 (2016), Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Notice 2015-75 (IRS)
- Catch-up limit, age 50 and over
The dollar limitation under § 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in § 401(k)(11) or § 408(p) for individuals aged 50 or over remains unchanged at $6,000.