2023 401(k) Catch-Up Contribution
The 2023 401(k) Catch-Up Contribution is +$7,500.
Effective 2023-01-01Source: Notice 2022-55 (IRS)Verified 2026-09-01
Compared with 2022
| Item | 2022 | 2023 | Change |
|---|---|---|---|
| Catch-up limit, age 50 and over | +$6,500 | +$7,500 | +$1,000 (+15.4%) |
Who it applies to
Participants in applicable employer plans (other than SIMPLE plans) who are age 50 or over and wish to make catch-up contributions in 2023.
What changed this year, and why
For 2023, the catch-up contribution limit for applicable employer plans (other than SIMPLE plans) for participants aged 50 or over is $7,500, up from $6,500 in 2022. The limit is set under Internal Revenue Code section 414(v)(2)(B)(i) and is adjusted annually for inflation.
Common questions
- What is a catch-up contribution?
- A catch-up contribution is an additional elective deferral that a participant aged 50 or older may make beyond the regular annual deferral limit. For 2023, the catch-up amount for applicable employer plans is an additional $7,500.
- Does the $7,500 catch-up limit apply to SIMPLE plans?
- No. SIMPLE plans have a separate, lower catch-up limit. The $7,500 limit applies to applicable employer plans other than SIMPLE plans under section 414(v)(2)(B)(i) of the Internal Revenue Code.
Your plan has to allow it, and you must turn 50 by year end
For 2023, a 401(k) plan may permit participants who are age 50 or over at the end of the calendar year to make catch-up contributions in addition to the regular elective deferral limit. The catch-up contribution limit is $7,500. Elective deferrals are not treated as catch-up contributions for 2023 until they exceed the $22,500 regular limit, the ADP test limit under section 401(k)(3), or any plan-specific limit. Participants must be at least age 50 by December 31, 2023 to qualify, and the plan itself must include a provision allowing these additional contributions. If the plan does not permit catch-up contributions, participants cannot make them even if they meet the age requirement.
Catch-up contributions. A 401(k) plan can permit par- ticipants who are age 50 or over at the end of the calendar year to also make catch-up contributions. The catch-up contribution limit is $7,500 for 2023 and 2024. Elective de- ferrals aren't treated as catch-up contributions for 2023 until they exceed the $22,500 limit ($23,000 limit for 2024), the ADP test limit of section 401(k)(3), or the plan limit (if any).
Publication 560 (2023), Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (IRS)
The catch-up sits outside the overall contribution limit
Catch-up contributions of $7,500 for 2023 are not counted toward the annual additions limit that caps total defined contribution plan contributions. This means the catch-up amount sits outside that overall ceiling. The annual additions limit includes employer contributions, employee after-tax contributions, and forfeitures allocated to a participant's account, but the catch-up for participants age 50 or over is excluded from that calculation. This separation allows older workers to save more without reducing the space available for employer matches or other contributions. The catch-up remains subject to the plan's own rules and the requirement that the participant be age 50 or over by the end of the calendar year. Plan sponsors and administrators should understand this exclusion when testing whether total contributions comply with the annual limit.
Catch-up contributions (discussed later under Limit on Elective Deferrals) aren't subject to the above limit.
Publication 560 (2023), 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 cannot exceed the lesser of two amounts: the catch-up contribution limit, or the excess of the participant's compensation over the elective deferrals that are not catch-up contributions. For 2023, the catch-up contribution limit is $7,500 for participants age 50 or over. This means if a worker's compensation is low relative to what they have already deferred through regular contributions, the catch-up may be capped below $7,500. The rule prevents catch-up contributions from exceeding what the participant actually earned beyond their regular deferrals. Plans must apply this lesser-of test when administering catch-up for eligible participants. This cap applies in addition to any other plan-specific limits or nondiscrimination requirements.
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 compensation over the elective deferrals that aren’t catch-up contributions.
Publication 560 (2023), Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (IRS)
The plan document itself must enforce the deferral limit
A plan must provide that employees cannot defer more than the limit that applies for a particular year. The plan document itself must enforce this ceiling. If an employee works at multiple jobs and the combined deferrals exceed the limit across plans, the excess is included in the employee's gross income. The plan administrator is responsible for ensuring the plan document contains this restriction. This requirement applies regardless of whether the participant qualifies for catch-up contributions of $7,500 for those age 50 or over. The plan's own limit, if any, may be lower than the IRS maximum, and the plan must enforce whichever limit applies. Participants should review their plan document to understand what deferral limit is in effect.
Your plan must provide that your employees can't defer more than the limit that applies for a particular year.
Publication 560 (2023), Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (IRS)
What to do when you defer too much across two jobs
If the total of an employee's deferrals is more than the limit for 2023, the employee can have the difference (called an excess deferral) paid out of any of the plans that permit these distributions. The employee must notify the plan by April 15, 2024, or an earlier date specified in the plan document, of the amount to be paid from each plan. The plan must then distribute that amount, plus earnings on it through the end of 2023, by April 15, 2024. If the excess is withdrawn by that deadline, it is included in the employee's gross income for 2023 but is not taxed again when distributed. If the excess is not withdrawn by April 15, it is taxed in both the year deferred and the year distributed. The catch-up contribution limit of $7,500 for those age 50 or over does not prevent this correction requirement when total deferrals exceed the applicable limit.
If the total of an employee's deferrals is more than the limit for 2023, the employee can have the difference (called an excess deferral) paid out of any of the plans that permit these distributions.
Publication 560 (2023), 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, $22,500 for 2023, 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 $7,500 for 2023. Two things follow. Someone who defers less than $22,500 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 de- ferrals aren't treated as catch-up contributions for 2023 until they exceed the $22,500 limit ($23,000 limit for 2024), the ADP test limit of section 401(k)(3), or the plan limit (if any).
Publication 560 (2023), 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 2022-55 (IRS)
- Catch-up limit, age 50 and over
The dollar limitation under section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in section 401(k)(11) or section 408(p) for individuals aged 50 or over is increased from $6,500 to $7,500.