Are catch-up contributions included in the 415 limit?

Unlike regular employee deferrals, catch-up contributions are not included in the 415 limit. While there is an annual limit imposed on catch-up contributions, it is designated by a different section of the Internal Revenue Service (IRS) code governing contributions to qualified retirement savings plans.

Named for section 415 of the Internal Revenue Code (IRC), the 415 limit reflects the maximum allowable contributions to a qualified retirement savings plan in a given year. The maximum employee contributions are dictated by section 402(g), but the overall contributions from all sources are limited by section 415. This includes employee deferrals, employer matching and profit-sharing contributions. These types of contributions are considered to be annual additions.

For example, the 415 limit for 401(k) plans for 2019 is $56,000. Of this, employees may contribute up to $19,000, per the limits outlined in IRC section 402(g). The remaining $37,000 can be composed of employer contributions and matching or profit-sharing contributions.

To encourage employees nearing retirement to increase their savings, the IRS allows people over the age of 50 to make annual catch-up contributions in excess of the 402(g) and 415 limits. Because these contributions are defined separately in IRC code 414(v), they are not included as annual additions under section 415. In the case of a plan audit, therefore, any contributions made to a plan as allowable catch-up contributions are not included in the 415 limit test.

In 2019, the maximum allowable catch-up contribution to a 401(k) plan is $6,000. This increases the maximum employee contribution to $25,000 and the maximum total annual contribution to $62,000 for plan participants over 50.