Catch-Up Contributions Can Help Participants Reach Retirement Readiness
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For 401(k) retirement plan participants age 50 or older, catch-up contributions can be an important tool in their retirement planning arsenal that can help them reach retirement readiness. And yet many eligible participants aren’t taking advantage of this added benefit. Now, through the use of a soon-to-be released Mobile Notification, this can change. |
Catch-Up Contributions Explained
Current law allows eligible plan participants to contribute an additional $6,000 per year (for tax year 2016 and 2017) in pretax contributions to their 401(k) accounts. A participant is considered "eligible" at the start of the calendar year in which he or she will turn 50.
This "catch-up" contribution can be made on top of a participant's regular elective deferral contribution ($18,000 in 2017), for a total contribution of $24,000. Even if a participant is considered a highly compensated employee (HCE) and is unable to contribute the maximum regular contribution, he or she can still contribute the full catch-up contribution during the calendar year.
Maximum Regular Elective Deferral Contribution: |
$18,000 |
Maximum Catch-up Contribution: |
$6,000 |
Maximum Total Permitted Contribution: |
$24,000 |
Even if a participant is considered a highly compensated employee (HCE) and is unable to contribute the maximum regular contribution, he or she may be entitled to contribute the full catch-up contribution ($6,000) during the calendar year.
The Value of Catch-Up Contributions
To help ensure your eligible participants are aware of catch-up contributions, this Spring, ADP Retirement Services will begin sending Mobile Push Notifications informing them of their eligibility. ADP will also send an annual reminder to all eligible participants, if he or she is not contributing the maximum amount allowed.
Mobile Push Notifications are an important part of ADP's Financial Wellness offering. To receive these timely notifications from ADP, participants must first download the ADP Mobile App and activate Push Notifications on their mobile devices.
How to Download the ADP Mobile App
The ADP Mobile App is available on the following devices: iPhone®, iPad®, iPod Touch®, iOS v7.0 or higher, or AndroidTM v4.4 or higher. ADP also offers a website for employees with unsupported mobile devices, available at https://mobile.adp.com.
The free ADP Mobile App can be downloaded from these App Stores:
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