Q. I'm age 55 and participate in my company’s 401(k) plan. Are catch-up contributions subject to percentage limits for elective deferrals? M.H., Buffalo, N.Y.
A. No. Catch-up contributions aren’t subject to other plan contribution limits for top wage-earners like a business owner. For instance, if your plan restricts you from electing the maximum deferral of $17,500 in 2013, you can still make the maximum catch-up contribution of $5,500 for plan participants age 50 or older. This is true even if your 401(k) contributions are capped because you’re a highly compensated employee (HCE) for plan purposes.
Tip: For 2013, the definition of an HCE includes 5%-or-more business owners and other employees earning above $115,000 if they’re in the top 20% compensation group for the company.