IRS Catches Up on 401(k) Rules Business Insurance (10/29/01) Vol. 29, No. 21 p.3; Geisel, Jerry
Official guidelines on implementing a tax law provision that enables older employees to make catch-up contributions to their 401(k) plans were enacted earlier this year. Starting next year, the provision will allow employees age 50 and older to add an extra $1,000 to their 401(k) plans, as well as certain other types of defined contribution plans. The provision will also increase the amount of the catch-up contributions by $1,000 annually until they reach $5,000 in 2006. Many employers may not have enough time to add a catch-up provision to their 401(k) plans by the beginning of the new year, but employees will be allowed to make the full $1,000 catch-up contribution if their employers make the adjustment later in the year.