2017 401(k) Catch-Up Contribution
The 2017 401(k) Catch-Up Contribution is +$6,000.
Effective 2017-01-01Source: Notice 2016-62 (IRS)Verified 2026-09-01
Compared with 2016
Every figure on this page is unchanged from 2016.
| Item | 2016 | 2017 | Change |
|---|---|---|---|
| Catch-up limit, age 50 and over | +$6,000 | +$6,000 | +$0 (+0.0%) |
Who it applies to
Participants in employer-sponsored defined contribution plans under section 401(k) who are age 50 or older by the end of the calendar year
What changed this year, and why
Under section 414(v)(2)(B)(i), the catch-up contribution limit for participants age 50 or over remained $6,000 for 2017.
Common questions
- What is the catch-up contribution limit for 2017?
- Participants age 50 or over may contribute an additional $6,000 as a catch-up contribution on top of the regular elective deferral limit.
- When did this limit take effect?
- The $6,000 catch-up limit applied beginning January 1, 2017.
Your plan has to allow it, and you must turn 50 by year end
A 401(k) plan must choose to offer the catch-up provision, and the participant must meet the age test by December 31 of the year in question. The plan document can forbid catch-ups entirely, so even an otherwise eligible worker cannot use the extra allowance unless the plan's written terms permit it. The age test looks at the end of the calendar year, so someone who turns 50 on December 31 still qualifies for the full catch-up for that year, while someone whose 50th birthday falls on January 1 of the following year does not. When both conditions are met, the participant may defer an additional $6,000 beyond the basic elective-deferral ceiling. The catch-up amount is not indexed separately each year; it has remained at $6,000 since earlier legislation set it, so the same figure applies for both 2017 and 2018. Workers younger than 50 at year-end cannot use the catch-up at all, regardless of how close they are to the birthday.
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 catch-up contributions. The catch-up contribu- tion limit is $6,000 for 2017 and 2018.
Publication 560 (2017), Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (IRS)
The catch-up sits outside the overall contribution limit
Defined contribution plans impose an overall annual-additions limit on the total contributions and other additions (excluding earnings) that can go into a participant's account in any year. That limit is expressed as the lesser of the participant's compensation or a stated dollar cap. Catch-up contributions are expressly carved out of this calculation. This means the catch-up dollars do not count against the annual-additions ceiling at all. For 2017, the catch-up amount available to participants age 50 and over is $6,000. Because the catch-up sits outside the overall limit, a participant can use the full $6,000 catch-up allowance without reducing the room available under the general annual-additions rule. The carve-out ensures that older workers receive the intended additional savings opportunity rather than having the catch-up absorbed into the regular contribution ceiling.
Catch-up contributions (discussed later un- der Limit on Elective Deferrals) aren't subject to the above limit.
Publication 560 (2017), Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (IRS)
Your pay can cap the catch-up below the stated limit
A participant's catch-up contributions for a year are subject to an additional restriction beyond the stated dollar limit. Even when the plan permits the full catch-up amount, the actual contribution cannot exceed the lesser of two figures: the catch-up contribution limit itself, or the excess of the participant's compensation over the elective deferrals that are not catch-up contributions. In other words, catch-up dollars cannot exceed what is left of the participant's pay after accounting for all regular (non-catch-up) elective deferrals. This compensation-based cap prevents a participant from using catch-up contributions to defer more than they actually earned during the year. For 2017, the catch-up contribution limit is $6,000, but if a participant's remaining compensation after regular deferrals is less than that amount, the catch-up is reduced to that lower figure. The rule applies regardless of the plan type and is designed to tie the catch-up benefit to actual earnings.
A participant's catch-up contributions for a year can't exceed the lesser of the following amounts. The catch-up contribution limit. The excess of the participant's compensa- tion over the elective deferrals that are not catch-up contributions.
Publication 560 (2017), Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (IRS)
The plan document itself must enforce the deferral limit
Under IRS rules for 2017, a 401(k) plan document is required to include a provision that prevents employees from making elective deferrals that exceed the annual legal limit. This means the plan administrator must enforce the cap at the payroll or recordkeeping level so that contributions above the threshold are simply not accepted or are immediately corrected. If an employee participates in multiple plans and manages to defer beyond the allowed amount across those arrangements, the excess is not treated as a valid tax-deferred contribution; instead, the difference is included in the employee's gross income for the year. For participants who are age 50 or over by the end of the calendar year, the plan may also permit catch-up contributions, which for 2017 allow an additional +$6,000 on top of the basic elective deferral limit. The plan's written terms must reflect both the basic cap and any applicable catch-up allowance to ensure compliance with federal tax requirements.
Your plan must provide that your employ- ees can't defer more than the limit that applies for a particular year.
Publication 560 (2017), 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's total elective deferrals exceed the annual limit across all plans, the excess amount must be removed from the plans. The employee can request that the excess deferral be paid out from any plan that permits such distributions. The employee must notify the plan by April 15 of the following year, specifying which plan or plans the excess should come from. The plan must then distribute the excess amount plus any earnings it generated through the end of the year by that same April 15 deadline. If the excess is withdrawn by the deadline, it is not taxed again in the year of distribution, though the earnings on the excess are taxable in the year they are paid out. The distribution is not subject to the additional tax on early distributions. Failure to remove the excess by the deadline results in the amount being taxed twice - once in the year of deferral and again in the year of distribution.
If the total of an employee's deferrals is more than the limit for 2017, the employee can have the difference (called an excess deferral) paid out of any of the plans that permit these distri- butions.
Publication 560 (2017), 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 2017, 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 2017. 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 catch-up contribu- tions for 2017 until they exceed the $18,000 limit (or the $18,500 limit for 2018), the ADP test limit of section 401(k)(3), or the plan limit (if any).
Publication 560 (2017), 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 2016-62 (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.