2018 401(k) Catch-Up Contribution
The 2018 401(k) Catch-Up Contribution is +$6,000.
Effective 2018-01-01Source: Notice 2017-64 (IRS)Verified 2026-09-01
Compared with 2017
Every figure on this page is unchanged from 2017.
| Item | 2017 | 2018 | Change |
|---|---|---|---|
| Catch-up limit, age 50 and over | +$6,000 | +$6,000 | +$0 (+0.0%) |
Who it applies to
Participants aged 50 or over in applicable employer plans
What changed this year, and why
The dollar limitation under Section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan for individuals aged 50 or over remained unchanged at $6,000 for 2018.
Common questions
- What is the catch-up contribution limit for 2018?
- In 2018, participants aged 50 or over could contribute an additional $6,000 as a catch-up contribution to their applicable employer plan, on top of the regular elective deferral limit.
- Did the catch-up limit change from the previous year?
- Yes. The catch-up contribution limit of $6,000 for 2018 was the same as in prior years; it did not change.
Your plan has to allow it, and you must turn 50 by year end
A 401(k) plan does not have to offer catch-up contributions; it must affirmatively permit them. If the plan document includes the provision, an eligible participant is someone who is age 50 or over at the end of the calendar year. That means you must reach age 50 by December 31 of the year for which the contribution is made - being 50 on January 1 of the following year is not enough. The catch-up is available in addition to the regular elective deferral limit, so a participant who is already at the basic deferral cap can still add the extra catch-up amount. For 2018, the catch-up limit for participants age 50 and over is $6,000 for a 401(k) plan (SIMPLE plans have a separate, lower catch-up amount). If a plan does not contain a catch-up provision, no participant - not even one who is age 60 or 70 - can make catch-up contributions through that plan.
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.
Publication 560 (2018), Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (IRS)
The catch-up sits outside the overall contribution limit
The defined contribution plan has an overall annual additions limit. For a given year, total contributions and other additions (excluding earnings) to a participant's account cannot exceed the lesser of the participant's compensation or a dollar cap set by the IRS. Catch-up contributions are treated specially: they are not counted toward that overall ceiling. In other words, once a participant age 50 or over has already received the maximum regular contribution allowed under the annual additions limit, the plan can still accept the catch-up amount on top. The catch-up therefore sits outside the overall limit rather than reducing the room available for employer contributions, employee after-tax contributions, or forfeiture allocations. For 2018, the catch-up amount is $6,000. Note, however, that catch-ups are still subject to their own separate rules, including the requirement that the plan permit them and the compensation cap described elsewhere.
Catch-up contributions (discussed later un- der Limit on Elective Deferrals) aren't subject to the above limit.
Publication 560 (2018), 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 age 50 or older and eligible for catch-up contributions, the amount that can actually be contributed as a catch-up may be less than the full $6,000 limit. The 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. In plain terms, a participant cannot defer more in total than they earn in compensation for the year. If a worker's pay is low enough that, after subtracting their regular (non-catch-up) deferrals, only a small amount of compensation remains, the catch-up is capped at that remaining compensation. The catch-up provision does not allow a participant to contribute more than they were paid during the year.
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 (2018), 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 stating that employees cannot defer more than the applicable limit for a given year. This is a plan-level requirement that exists independently of the IRS limit and ensures the plan administrator has the authority and obligation to stop excess deferrals at the source. The basic limit on elective deferrals is $18,500 for 2018 and $19,000 for 2019, and this limit applies to all salary reduction contributions and elective deferrals made by the employee. If a participant works for more than one employer and, in conjunction with other plans, exceeds the deferral limit, the excess amount is included in the employee's gross income. The plan document's requirement to enforce the limit protects participants from accidentally deferring too much and creating a tax problem they must later correct. A separate catch-up provision, if the plan includes one, allows an additional $6,000 for participants who are age 50 or over by year end.
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 $18,500 for 2018 and $19,000 for 2019. This limit applies to all salary reduction contributions and elective deferrals. If, in con- junction with other plans, the deferral limit is ex- ceeded, the difference is included in the em- ployee's gross income.
Publication 560 (2018), 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 defers too much across multiple employer plans in 2018, the excess amount is called an excess deferral and must be corrected. The employee can have the excess deferral paid out of any of the plans that permit such distributions. The employee must notify the plan by April 15, 2019 (or an earlier date specified in the plan) of the amount to be removed from each plan. The plan must then pay the employee that excess amount, plus any earnings attributable to it through the end of 2018, by April 15, 2019. If the excess is withdrawn by that April 15 deadline, the distributed excess is not taxed twice: it is included in income for 2018 (the year it was deferred) but the earnings paid out are taxed in the year received. Failing to remove the excess by the deadline results in the excess being taxed again in the year it is distributed, creating an unfavorable double-tax outcome.
If the total of an employee's deferrals is more than the limit for 2018, the employee can have the difference (called an excess deferral) paid out of any of the plans that permit these distri- butions. He or she must notify the plan by April 15, 2019 (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 2018, by April 15, 2019.
Publication 560 (2018), 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, $18,500 for 2018, 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 2018. Two things follow. Someone who defers less than $18,500 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 2018 until they exceed the $18,500 limit (or the $19,000 limit for 2019), the ADP test limit of section 401(k)(3), or the plan limit (if any).
Publication 560 (2018), 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 2017-64 (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.