How Do 457 Catchup Contributions Work?

A 457(b) plan is a deferred compensation retirement plan for employees of state and local governments and certain non-profit organizations. These plans allow employees to save for retirement on a tax-advantaged basis. The Internal Revenue Service (IRS) sets annual contribution limits, which for 2025 is $23,500. To help individuals closer to retirement increase their savings, many plans offer “catch-up contributions,” which permit eligible participants to contribute above the standard annual limit. For 457(b) plans, there are two distinct types of catch-up contributions, each with its own rules and eligibility requirements.

The Age 50 Catch-Up Provision

A common feature of many retirement plans is the Age 50 Catch-Up provision, which is also available in governmental 457(b) plans. To be eligible, a plan participant must be at least 50 years old, or turn 50, by the last day of the calendar year. For 2025, the Age 50 Catch-Up allows an eligible participant to contribute an additional $7,500 over the standard annual deferral limit, meaning a participant could contribute a total of $31,000.

Beginning in 2025, a new, higher catch-up limit is available for participants aged 60, 61, 62, and 63. If their plan allows it, these individuals can make a catch-up contribution of $11,250. This would increase their potential total contribution to $34,750 for the year. Non-governmental 457(b) plans, typically those sponsored by non-profit organizations, are generally not permitted to offer the Age 50 Catch-Up.

The Special 457 Catch-Up Provision

Exclusive to 457(b) plans is the Special 457 Catch-Up provision, designed for long-term employees who may not have maximized their contributions in previous years. Eligibility is not based on age but on proximity to the plan’s defined “Normal Retirement Age.” A participant can use this special catch-up only during the three-year period ending before they reach the Normal Retirement Age specified in their plan documents.

The provision allows contributing amounts that were permissible but not deferred in prior years. Calculating the maximum available amount requires a review of one’s contribution history. The first step is to determine the total amount that could have been contributed over the entire period of participation in the plan by summing up the annual IRS contribution limits for every year of employment.

Next, the participant must determine the total amount they actually contributed to the plan during those same years. The difference between the total allowable contributions and the total actual contributions is the “underutilized amount.” For example, if a participant was eligible to contribute $150,000 over their years of service but only contributed $110,000, their underutilized amount would be $40,000.

The maximum amount that can be contributed in any single year using this provision is limited. A participant can contribute up to twice the regular annual deferral limit for the current year. For 2025, the maximum contribution under the Special 457 Catch-Up would be $47,000, provided the participant’s underutilized amount is sufficient to cover the excess over the standard limit.

Coordination and Election Rules

Federal regulations stipulate that an individual cannot use both the Age 50 Catch-Up and the Special 457 Catch-Up simultaneously. Instead, the participant must determine which of the available provisions allows for the greatest contribution and elect to use that one for the year.

For a participant aged 60, 61, 62, or 63 who is also in their three-year window for the Special 457 Catch-Up, there may be three options to compare. These are the standard Age 50 Catch-Up ($7,500), the higher age-based catch-up ($11,250), or the Special 457 Catch-Up (up to $47,000). In any scenario, the participant would elect the single provision that results in the largest possible contribution for that year.

Making this choice requires a formal election process with the plan administrator. Participants must proactively engage with their employer or the entity managing their 457(b) plan to declare their intent to use a catch-up provision and complete the necessary paperwork.

Interaction with Other Retirement Plans

The standard annual contribution limit for a 457(b) plan is independent of the limits for other workplace retirement plans, such as a 401(k) or a 403(b). This means an employee who has access to both a governmental 457(b) plan and another type of plan can contribute the full annual maximum to each. For 2025, an individual could contribute $23,500 to their 403(b) and another $23,500 to their 457(b), for a total of $47,000 in tax-deferred savings, not including any catch-up contributions.

While the base contribution limits are separate, the application of age-based catch-up contributions requires coordination. An individual cannot “double dip” on the catch-up amount in a single year across multiple plans maintained by the same employer. The total catch-up contribution is limited to one amount across all applicable plans. For 2025, this limit is $7,500 for most participants aged 50 and over, or $11,250 for those aged 60-63 who are eligible for the higher limit. An employee could split this amount, contributing extra to their 401(k) and their 457(b), but the total cannot exceed the single catch-up limit for which they are eligible that year.