401(k) catch-up contributions
Maximize retirement savings with 401(k) catch-up contributions for employees aged 50 and older.
401(k) catch-up contributions
Purpose
Employees aged 50 or older may contribute additional funds to their 401(k) plan through catch-up contributions. These amounts are intended to help employees nearing retirement boost their savings beyond the standard IRS contribution limits.
Check supports these contributions by tracking all amounts under the standard 401(k) benefit code, activating eligibility automatically based on the employee’s age.
IRS contribution limits
The table below outlines the 401(k) contribution limits by year:
Type | 2023 | 2024 | 2025 |
401(k) Annual Limit | $22,500 | $23,000 | $23,500 |
Catch-Up Annual Limit | $7,500 | $7,500 | $7,500 |
Total Annual Limit | $30,000 | $30,500 | $31,000 |
Example:
- A 49-year-old employee in 2024 may contribute up to $23,000
- A 50-year-old employee in 2024 may contribute up to $30,500
Enrollment process
During implementation, prior payroll systems may separate standard and catch-up contributions into two deduction codes. Check does not support separate deduction codes for catch-up contributions.
What to do in Check
- Combine any historical standard and catch-up contribution amounts into a single year-to-date (YTD) 401(k) total under the standard benefit code
- Combine deduction percentages into one total percentage for ongoing deductions
Examples:
- If an employee has $5,000 YTD in standard 401(k) and $1,000 YTD in catch-up, the YTD amount in Check should be entered as $6,000 under the standard 401(k) code
- If an employee is contributing 5% to standard and 1% to catch-up, enter 6% as the Employee Contribution Percent in the 401(k) plan setup
Ongoing payroll handling
Check automatically allows catch-up contributions for employees who turn 50 or older during the calendar year. No system change is required—the employee simply needs to:
- Update their contribution percent to reflect the total they wish to contribute, including both standard and catch-up amounts
Employees can elect this higher percentage starting in January of the year they turn 50.
Example:
In 2024, an employee earning $100,000 annually and contributing:
- 23% of their income will contribute up to the $23,000 standard limit if under 50
- 30% of their income will reach the $30,500 total limit if 50 or older
Employee communication
It’s important to clarify that:
- Check tracks both standard and catch-up contributions under a single 401(k) deduction
- The deduction appears as one line item on the employee’s pay statement
- The total contribution (including catch-up) is reported in Box 12 (Code D) on the employee’s Form W-2
This should be communicated clearly to employees, especially those who previously saw separate contributions in legacy systems.
Last updated on June 6, 2025