How Do 457 Plan Catch-Up Contributions Work?
Learn the rules for making additional 457(b) plan contributions. This guide explains how to determine your eligibility and choose the most beneficial provision.
A 457(b) plan is a tax-advantaged retirement savings plan available to employees of state and local governments, as well as some non-profit organizations. These deferred compensation plans allow participants to set aside a portion of their salary for retirement, with contributions and earnings growing on a tax-deferred basis. As participants approach their retirement years, these plans provide opportunities to increase savings beyond the standard annual contribution limits through “catch-up” contributions.
The Age 50 Catch-Up Contribution
Governmental 457(b) plans permit participants who are age 50 or older to make additional contributions beyond the regular annual limit. To be eligible, a participant must attain age 50 by the end of the calendar year. This provision helps individuals accelerate their retirement savings as they get closer to leaving the workforce.
For 2025, the age 50 catch-up contribution amount is $7,500. This is in addition to the standard elective deferral limit of $23,500 for 2025. An eligible participant could therefore contribute a total of $31,000. This catch-up amount is subject to periodic cost-of-living adjustments by the IRS and can increase in future years.
A newer provision, effective January 1, 2025, allows participants aged 60 through 63 to make a larger catch-up contribution. This “super” catch-up, part of the SECURE 2.0 Act, increases the limit for this age group to the greater of $10,000 or 150% of the regular catch-up amount. For 2025, this results in a higher catch-up limit of $11,250 for those aged 60 to 63.
The Special 457 Catch-Up Provision
A feature unique to 457(b) plans is the Special 457 Catch-Up contribution, also called the pre-retirement catch-up. This provision allows participants to make up for years in which they were eligible to contribute but did not contribute the maximum amount. Eligibility is not based on age but on being within the three-year period prior to the plan’s defined “normal retirement age.”
The normal retirement age is specified in the plan’s official documents. It may be a specific age, like 65, or the earliest age a participant can retire with a full pension benefit. Participants must consult their plan documents to find this age, as it dictates the three-year window for this provision.
To calculate the Special 457 Catch-Up amount, a participant reviews their contribution history. They must determine the total amount they were eligible to contribute in all prior years, subtract the amount actually contributed, and the difference is their “underutilized” amount. The maximum catch-up in a single year is the lesser of twice the annual deferral limit ($47,000 in 2025) or the participant’s total underutilized amount.
For example, a participant’s plan defines normal retirement age as 65. At age 62, they enter the three-year window and review their contribution history, finding their underutilized amount is $40,000.
In 2025, they can contribute their regular $23,500 plus an additional $23,500 as a special catch-up. This brings their total to $47,000, as their $40,000 underutilized amount covers the catch-up portion.
Coordination of Catch-Up Provisions
A participant eligible for both the Age 50 Catch-Up and the Special 457 Catch-Up in the same year cannot use both simultaneously. The regulations require the participant to choose the provision that allows for the larger contribution for that year.
For instance, a 55-year-old participant is within three years of their plan’s normal retirement age. The Age 50 Catch-Up allows an additional $7,500 in 2025. However, their Special 457 Catch-Up calculation allows for up to $23,500. In this scenario, the participant would use the Special 457 Catch-Up to make a larger contribution.
Making a Catch-Up Contribution Election
After choosing a catch-up provision, a participant must make a formal election with their employer or plan administrator. This process is not automatic and requires contacting the human resources or benefits office to begin the additional contributions.
The plan requires completing a specific election form or payroll authorization. This form requires specifying the chosen catch-up provision and the contribution amount. If electing the Special 457 Catch-Up, the plan may require providing the calculation of the underutilized amount.
Participants must adhere to any plan deadlines for making or changing contribution elections. These deadlines are often tied to payroll schedules. Submitting the paperwork accurately and on time ensures contributions are correctly withheld and credited.