401K contributions
My employer requires me to make designations between “regular” 401k contributions and “catch up” 401k contributions. I just looked, and I am on target for just under the total allows (regular + catch up) for 2021 of $26,000. However, without changing, the split is about $21,000 in regular and $5,000 in catch up. Do I need to change my deductions through the end of the year to make it $19,500 regular and $6,500 in catch up?
Terry Says
“Catch up” contributions are designated for people over 50, who are allowed to contribute more to plans. Here’s the rule for 2021:
Employee 401(k) contributions for plan year 2021 will once again top off at $19,500 with an additional $6,500 catch-up contribution allowed for those turning age 50 or older. But maximum contributions from all sources (employer and employee combined) will rise by $1,000.
I have never heard of a plan sponsor (the bookkeeper) asking the individual to make this designation. Typically, this is an accounting function.
You should immediately contact the plan recordkeeper and ask what this is all about. They will know the maximum you are allowed to contribute each year — and they should be able to make those designations.
Please do write back and let me know what they say! If it’s a big company like Fidelity or an insurance company, this shouldn’t be a problem. And if it IS a problem, I’d like to know why that is happening!
