2021 401(k) Catch-Up Contribution
The 2021 401(k) Catch-Up Contribution is +$6,500.
Effective 2021-01-01Source: Notice 2020-79 (IRS)Verified 2026-09-02
Compared with 2020
Every figure on this page is unchanged from 2020.
| Item | 2020 | 2021 | Change |
|---|---|---|---|
| Catch-up limit, age 50 and over | +$6,500 | +$6,500 | +$0 (+0.0%) |
Who it applies to
Employees aged 50 or over who participate in an applicable employer plan (other than a SIMPLE or section 401(k)(11) plan)
What changed this year, and why
The catch-up contribution limit for applicable employer plans, under section 414(v)(2)(B)(i), for individuals aged 50 or over remains $6,500 effective January 1, 2021, unchanged from 2020.
Common questions
- How much can someone age 50 or older contribute as a catch-up in 2021?
- The catch-up contribution limit for 2021 is $6,500 for individuals aged 50 or over.
- Did the 2021 catch-up limit change from 2020?
- No. The catch-up contribution limit remained at $6,500, the same as in 2020.
Your plan has to allow it, and you must turn 50 by year end
A 401(k) plan must affirmatively allow participants to make catch-up contributions; they are not automatic. In addition, a participant must reach age 50 by the last day of the calendar year to be eligible. Once both conditions are met, the participant may defer an extra $6,500 in 2021 beyond the regular elective deferral limit. If the plan document does not contain a catch-up provision, no participant - regardless of age - may make these additional contributions, so plan sponsors should confirm the plan terms expressly permit them.
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.
Publication 560 (2021), Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (IRS)
The catch-up sits outside the overall contribution limit
For 2021, defined contribution plans have an overall annual limit on contributions and other additions to a participant's account, but catch-up contributions for participants age 50 or over sit outside that ceiling. The IRS rules state that catch-up contributions are not subject to the annual additions limit, meaning the $6,500 catch-up amount does not count toward the plan's overall cap. This allows older workers to save an additional $6,500 beyond what younger participants can contribute under the standard rules. The catch-up provision operates independently, giving those approaching retirement the ability to build extra savings without competing for space under the regular contribution maximum that applies to all other additions to the plan account.
Catch-up contributions (discussed later un- der Limit on Elective Deferrals) aren't subject to the above limit.
Publication 560 (2021), 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 actually contributed cannot exceed the participant's remaining compensation for the year. Specifically, catch-up contributions are limited to the lesser of the stated catch-up limit ($6,500 for 2021) or the excess of the participant's compensation over the elective deferrals that are not catch-up contributions. This means that if a participant's pay is low relative to the deferrals already made, the catch-up amount may be reduced below the full $6,500 limit, or eliminated entirely, because contributions cannot exceed compensation.
A participant's catch-up contributions for a year can't exceed the lesser of the following amounts.
Publication 560 (2021), 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 annual limit. This is not merely a suggestion or a best practice; it is a plan design requirement. The limit applies to all salary reduction contributions and elective deferrals across all plans the employee participates in. If deferrals exceed the limit when combined with other plans, the excess is included in the employee's gross income. For participants age 50 or over, the plan must also accommodate the additional $6,500 catch-up contribution, but only if the plan terms expressly permit it.
Your plan must provide that your employ- ees can't defer more than the limit that applies for a particular year.
Publication 560 (2021), 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 total deferrals exceed the annual limit, the excess is called an excess deferral. The employee can have the difference paid out of any of the plans that permit these distributions. The employee must notify the plan of the amount to be distributed from each plan. The plan must then pay the employee that amount, plus earnings on the amount through the end of the year, by the following April. If the excess is withdrawn by the deadline, it is not taxed again in the year of distribution, but the earnings are taxable in the year distributed. This correction mechanism applies whether the excess arose from a single plan or from coordination failures across two or more plans, including situations involving catch-up contributions of $6,500.
If the total of an employee's deferrals is more than the limit for 2021, the employee can have the difference (called an excess deferral) paid out of any of the plans that permit these distri- butions.
Publication 560 (2021), 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 2021, 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 2021. 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 2021 until they exceed the $19,500 limit ($20,500 limit in 2022), the ADP test limit of section 401(k)(3), or the plan limit (if any).
Publication 560 (2021), Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (IRS)
You must tell the plan by April 15 to pull out an excess catch-up deferral
For 2021, an employee who has made an excess deferral - including an excess catch-up deferral above the $6,500 catch-up limit for those age 50 and over - must notify the plan by April 15, 2022 of the amount to be distributed. The plan then pays the employee that excess, plus any earnings on it through the end of 2021, also by April 15, 2022 (or any earlier date the plan itself specifies). Failing to give notice and withdraw the excess by this deadline means the amount is taxed twice: once when contributed in 2021, and again when eventually distributed from the plan, because the excess is not counted in the employee's cost basis. In addition, if the excess is left in the plan and the employee participates in no other employer's plan, the entire plan may be disqualified.
15, 2022 (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 2021, by April 15, 2022.
Publication 560 (2021), Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (IRS)
Leave the excess in the plan and it is taxed twice
For 2021, if an employee leaves an excess deferral - including an excess catch-up deferral above the $6,500 catch-up limit for those age 50 and over - in the plan past the April 15, 2022 deadline, the excess is taxed twice. The amount was already taxable when contributed in 2021, but because it is not included in the employee's cost basis, it is taxed again when eventually distributed from the plan. Beyond the double taxation, leaving the excess in the plan risks disqualification of the entire plan if the employee participates in no other employer's plan.
If the em- ployee doesn't take out the excess deferral by April 15, 2022, the excess, though taxable in 2021, isn't included in the employee's cost ba- sis in figuring the taxable amount of any even- tual distributions under the plan. In effect, an excess deferral left in the plan is taxed twice, once when contributed and again when distrib- uted.
Publication 560 (2021), 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 2020-79 (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 $6,500.