In 2001, Congress passed laws allowing participants in qualified retirement programs who are 50 years of age or older to make catch-up contributions. These contributions allow people over age 50 to increase their total savings for retirement by making additional elective deferral contributions to their retirement programs, above and beyond the limits set by federal law (the limit on elective deferrals for 2005 is 14,000 per year)

The law permitting catch-up contributions took effect in 2002, but your ability to make these contributions rests on whether or not your employer amends its plan document to permit them. Refer to your plan rules and highlights to find out if your program will permit catch-up contributions.

Because catch-up contributions are allowed on top of your program’s current limit, you may be able to contribute a maximum of $18,000 in 2005 — the regular annual limit of $14,000 and the $4,000 catch-up limit. If your employer-sponsored retirement program restricts your annual contributions to an amount less than the maximum federal limit, you should still be able to make a full catch-up contribution.

403(b) programs may have an additional “catch-up” provision called the 15-year rule.  This special "catch-up" provision allows participants to increase their annual contribution by $3,000 more than the current $14,000 limit. To qualify workers must have completed at least 15 years of service with the same employer (years of service need not be consecutive), and cannot have contributed more than an average of $5,000 in previous years. 

In addition, 457 Governmental plans can have their own variations to the catch up limits.  Contact a financial planner for more information on your unique situation.