Understanding 401(k) Catch-Up Contributions

⚡ What are 401(k) Catch-Up Contributions?

401(k) Catch-Up Contributions allow eligible employees to contribute additional amounts to their 401(k) beyond the standard annual contribution limit set by the IRS. This gives employees nearing retirement an opportunity to save more for retirement directly through their paycheck.

The IRS recognizes two types of catch-up contributions:

• Standard Catch-Up Contribution: Available to employees aged 50 and older.
• Super Catch-Up Contribution: Introduced under SECURE 2.0, available to employees aged 60 to 63 only, who may be eligible for a higher catch-up amount than the standard tier.

PUSH now automatically identifies eligible employees and applies the applicable catch-up contribution in payroll, based on the employee's date of birth on file. This removes the need for payroll teams to manually track or apply these contributions outside of the platform.

🔐 Access required

The 401(k) Catch-Up Contribution is available to US-based customers with the Payroll Add-On. 

Who can manage catch-up contribution settings?

• Super Administrators: Full access to review and update catch-up contribution settings on any employee profile.

• Team Administrators: Can review and update catch-up contribution settings if they have permission to manage employee profiles.

• Employees: Can review and update catch-up contribution settings from the Savings Plans page. 

📋 Topics covered in this article:

• What is a 401(k)?
• How 401(k) Catch-Up Contributions Work
• Opting In of 401(k) Catch-Up Contributions
• Opting Out of 401(k) Catch-Up Contributions (Employee or Admin Workflow)
• How Catch-Up Contributions Appear in Payroll
• Frequently Asked Questions

📚 Related articles:

• IRS: 401(k) 
• Understanding Earnings and Deductions Presets (U.S. Accounts Only)
• Managing US Payroll, Compliance, & Employee Management Automations

What is a 401(k)?

A 401(k) is an employer-sponsored retirement savings plan that allows employees to contribute a portion of their paycheck toward retirement on a tax-advantaged basis. 

Employers in the US can choose to offer a 401(k) plan as part of their benefits package, and employees who are enrolled can elect how much they'd like to contribute each pay period, up to the annual limit set by the IRS.

Offering a 401(k) is not federally mandated; there are no federal laws requiring employers to provide one. However, some states require businesses to offer some form of retirement savings plan, which may or may not be a 401(k). 

📌 | Note: We recommend checking with your legal or benefits advisor to understand what applies to your business and location.

How 401(k) Catch-Up Contributions Work

Catch-up contributions are an IRS provision that allows employees who are nearing retirement age to save more than the standard annual limit. 

The IRS recognizes two tiers:

• Employees turning 50 or older within the tax year qualify for the Standard Catch-Up tier. 

• Employees turning 60, 61, 62, or 63 within the tax year qualify for the Super Catch-Up tier instead, introduced under SECURE 2.0. When an employee turns 64, they revert back to the Standard Catch-Up tier.

"For example, if an employee's birthday is in October and they are turning 50 that year, they are considered eligible for the Standard Catch-Up tier for the entire tax year; not just from their birthday onward. This means if they reach the standard contribution limit earlier in the year, the catch-up will apply at that point regardless of when their birthday falls."

As an eligible employee approaches their standard 401(k) contribution limit, they will receive an email notification in advance that they qualify for catch-up contributions and that their contributions will automatically continue past the standard limit. This gives both the employee and their administrator time to review the details, decide whether to participate, and make any necessary adjustments before the catch-up contributions take effect. 

Opting In of 401(k) Catch-Up Contributions

When catch-up contributions are automatically applied, they continue at the same contribution rate already designated in the employee's Savings Plan page. 

Whether that's a percentage of gross pay or a fixed amount per pay cycle. No changes are required unless the employee wants to contribute a different amount toward the catch-up portion.

If an employee wishes to update their contribution amount, they can do so from their Savings Plan page. Any changes made will be applied starting from the next payroll cycle.

📌 | Note: The automatic catch-up simply allows contributions to continue past the standard annual limit.

Opting Out of 401(k) Catch-Up Contributions

Participation in catch-up contributions is optional. If an eligible employee decides they do not wish to continue contributing beyond the standard limit, they can opt out. This can be actioned by either the employee on their Savings Plan page or an administrator within the employee's profile.

For Employees — via the Savings Plan Page:

1. Log in to your Push account.
2. Navigate to your Savings Plan page.
3. Update your catch-up contribution preference to opt out.

For Administrators — via the Employee Profile:

1. Click the Employees tab.
2. On the left-hand navigation bar, select the appropriate Employee List: Active, Pending, On Leave, or Inactive.
   1. If the Employee does not exist yet, click Add a New Employee instead. You can review our How To Add A New Employee guide for step-by-step instructions.
3. Under Search, input the employee’s name.
4. Under Edit, click the pencil icon to open the profile.
5. Locate the Employee Retirement Plan Preferences section.
   📌 | Note: This section will only appear if the employee has at least one active 401(k) deduction.
6. Enable the Opt Out of 401(k) Catch-Up Contributions toggle.
7. Once done, click Update Employee to save the changes.

How Catch-Up Contributions Appear in Payroll

Once an employee is enrolled for catch-up contributions, the process is automated based on the contribution election set up in their employee profile under their Savings Plan. No manual payroll entry is required.

When an eligible employee reaches their standard 401(k) contribution limit, a separate catch-up deduction line will automatically appear on their payroll. This line item is distinct from their regular 401(k) deduction, making it easy to identify the catch-up portion separately in payroll records and on the employee's pay stub.

Catch-up contributions are tracked separately from standard 401(k) contributions and will be correctly reflected in year-end W-2 reporting in compliance with IRS reporting requirements.

📌 | Note: Any contribution amounts reported on an employee's pay stub will also sync to your connected 401(k) provider, keeping records consistent across systems.

Employer Matching and Catch-Up Contributions

Employer 401(k) matching currently does not automatically apply catch-up contributions in PUSH. Whether your plan documents allow an employer match on catch-up contributions depends on your specific 401(k) plan — IRS rules permit it, but do not require it.

📌 | Note: We recommend confirming with your plan provider whether your plan document covers catch-up contributions for matching purposes. If it does, any employer-side entry would need to be added manually.

 For guidance on setting up employer contributions, see our dedicated article: How To Setup A Recurring Earning/Deduction.

Frequently Asked Questions 

Have questions about 401(k) Catch-Up Contributions? This section covers some common questions to help you navigate the feature.

💡| Tip: Can’t find what you’re looking for? Check out our Getting Help & Contacting Support article for the latest ways to connect with our team.

Q: Is eligibility based on an employee's exact birthdate or the tax year? 
A: Eligibility is based on the age an employee turns within the current tax year, consistent with how the IRS determines catch-up eligibility. This means an employee is considered eligible for the full tax year in which they turn the applicable age (50, or 60 through 63), regardless of the specific date their birthday falls on.

Q: Does an eligible employee automatically receive an extra contribution amount? 
A: No. A catch-up contribution does not add a fixed extra amount to an employee's pay. It allows their existing 401(k) contribution to continue past the standard annual limit, up to the applicable catch-up limit. A separate catch-up deduction line will appear on the employee's payroll to keep the catch-up portion distinct from their existing 401(k) deduction.

Q: Can an employee opt out of catch-up contributions themselves? 
A: Employees can opt out by logging into their account and navigating to their Savings Plan page, or they can contact their administrator, who can enable the Opt Out toggle from within the Employee Retirement Plan Preferences section of the employee's profile.

Q: What happens if an employee's date of birth isn't on file? 
A: The system will not be able to determine the age the employee turns within the tax year, so they will not be identified as eligible for catch-up contributions, and the Employee Retirement Plan Preferences section will not appear on their profile. We recommend reviewing the Employee Information Report to confirm dates of birth are entered, particularly for employees approaching age 50 or 60.

Q: Where can I find the current IRS contribution and catch-up limits? 
A: IRS contribution limits, including the amounts for both the Standard and Super Catch-Up tiers, are updated annually and may change from year to year. We recommend visiting the IRS website or speaking with your retirement plan provider for the most current limits and eligibility requirements.

Additional Information

Need further help? Refer to our Getting Help & Contacting Support article for the latest support options and ways to connect with our team.