For 2022, the normal deferral amount allowed is $20,500, and if over age 50, there is a Catch-Up amount allowed of $6,500. Normal and Catch Up Contributions
Additionally, if you are nearing retirement, IRS Code allows you to make up for contributions not deferred in previous years of employment. You can “catch up” for three consecutive calendar years prior to the calendar year of your declared normal retirement age. The total amount you can catch up is determined by subtracting what you have contributed from the maximum allowed by law. The maximum amount you can defer in a single year is a combination of your regular deferral for that year and any amounts allowed but not contributed since 1979. Each calendar year’s maximum, set by the IRS, differs and is subject to change.
Be sure you understand that:
- Deferred compensation is a voluntary program.
- Deferred compensation funds are subject to IRS regulations.
- There are strict IRS restrictions on withdrawals prior to retirement.
- Benefit-eligible employees can begin or stop contributions to a deferred compensation account at any time.
- Due to the SECURE Act, you must begin receiving benefit payments (IRS-Mandated Required Minimum Distributions or RMDS) at age 72 for anyone who turns 70 1/2 after December 31, 2019. If you turned 70 1/2 before 2019, you must continue to take your Required Minimum Distribution by the end of each calendar year.
Providers and additional plan information are available from Employee Benefit Services at 954-357-6700 or email at firstname.lastname@example.org.