2020 401(k) Catch-Up Contribution
The 2020 401(k) Catch-Up Contribution is +$6,500.
Effective 2020-01-01Source: Notice 2019-59 (IRS)Verified 2026-09-01
Compared with 2019
| Item | 2019 | 2020 | Change |
|---|---|---|---|
| Catch-up limit, age 50 and over | +$6,000 | +$6,500 | +$500 (+8.3%) |
Who it applies to
Employees aged 50 or over who participate in an applicable employer plan, as defined under section 414(v)(2)(B)(i) of the Internal Revenue Code
What changed this year, and why
Effective January 1, 2020, the catch-up contribution limit for applicable employer plans increased. Participants aged 50 or over may contribute an additional $6,500 beyond the standard elective deferral limit, up from the prior-year amount.
Common questions
- What is the catch-up contribution limit for 2020?
- For 2020, the catch-up contribution limit is $6,500 for participants aged 50 or over.
- Who is eligible for the catch-up contribution?
- The catch-up contribution is available to participants who are 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
A 401(k) plan is not required to offer catch-up contributions. The plan document must explicitly permit participants who reach age 50 by the end of the calendar year to make these additional contributions. If the plan does not include this provision, even eligible participants cannot make catch-up contributions regardless of their age or income. For 2020, the catch-up contribution limit is $6,500. These catch-up contributions are separate from the regular elective deferral limit and only become available after an employee's deferrals exceed the standard limit, the ADP test limit, or any plan-specific limit. The age requirement is measured at the end of the calendar year, so a participant who turns 50 on December 31 qualifies for the full catch-up amount for that entire year.
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 $6,500 for 2020 and 2021.
Publication 560 (2020), Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (IRS)
The catch-up sits outside the overall contribution limit
The overall annual additions limit for a defined contribution plan restricts the total contributions and other additions (excluding earnings) that can go into a participant's account in a year. However, catch-up contributions are treated separately. The IRS explicitly states that catch-up contributions are not subject to the annual additions limit described above. This means a participant age 50 or over can contribute catch-up amounts on top of whatever has already been added to the account, up to the catch-up limit of $6,500 for 2020, without those catch-up dollars counting against the overall ceiling. The separation ensures that older participants can fully use the catch-up provision even if their account has already received the maximum annual additions from employer contributions, profit-sharing, or other sources.
Catch-up contributions (discussed later un- der Limit on Elective Deferrals) aren't subject to the above limit.
Publication 560 (2020), 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 over and the plan permits catch-up contributions, the actual amount the participant can contribute under the catch-up provision cannot exceed the lesser of two figures: the catch-up contribution limit itself ($6,500 for 2020) or the excess of the participant's compensation over the elective deferrals that are not catch-up contributions. In practice, this means a participant whose compensation is low relative to the amount already deferred may find the catch-up amount reduced below $6,500. If a participant's compensation, minus the non-catch-up elective deferrals already made, leaves less than $6,500 of room, the catch-up is capped at that smaller amount. The rule prevents a participant from using the catch-up provision to defer more than they actually earned in compensation for the year, ensuring that catch-up contributions remain tied to real pay.
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 aren’t catch-up contributions.
Publication 560 (2020), Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (IRS)
The plan document itself must enforce the deferral limit
The plan document is required to state that employees cannot defer more than the applicable limit for a particular year. For 2020, the basic limit on elective deferrals is $19,500. This limit applies to all salary reduction contributions and elective deferrals across all plans the employee participates in. If the employee exceeds this limit when deferrals across multiple employers or plans are combined, the excess is included in the employee's gross income. The plan itself must enforce the cap; it is not left to the employee to self-police. Once an employee reaches the annual deferral limit, any further elective deferrals are excess unless the employee is age 50 or over and the plan permits catch-up contributions. In that case, deferrals are not treated as catch-up contributions until they exceed the basic limit, the ADP test limit, or the plan 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 $19,500 for 2020 and 2021.
Publication 560 (2020), 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 deferrals exceed the annual limit for 2020, the excess amount is called an excess deferral. The employee can have the excess paid out of any plan that permits such distributions, and must notify the plan by April 15, 2021 (or an earlier date specified in the plan) of the amount to be paid from each plan. The plan must then distribute the excess, plus any earnings on that amount through the end of 2020, by April 15, 2021. If the excess is withdrawn by that deadline, it is not included again in gross income for 2021, but the earnings distributed with it are taxable in the year they are taken out. Even when the excess is timely removed, the amount is still counted for purposes of the plan's nondiscrimination testing requirements.
If the total of an employee's deferrals is more than the limit for 2020, the employee can have the difference (called an excess deferral) paid out of any of the plans that permit these distri- butions.
Publication 560 (2020), 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, $19,500 for 2020, 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 $6,500 for 2020. Two things follow. Someone who defers less than $19,500 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 2020 and 2021 until they exceed the $19,500 limit, the ADP test limit of section 401(k)(3), or the plan limit (if any).
Publication 560 (2020), 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 2019-59 (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 is increased from $6,000 to $6,500.