Special considerations may allow you to contribute more than the normal limits to your 457 retirement plan. One program, sometimes called the "age 50 catchup," allows you to contribute additional funds to the plan if you are 50 years or older. Another program, the "double limit catchup" or the "preretirement catchup," allows you to double the normal annual limit if you have undercontributed to your 457 retirement plan in the past and are within three years of your retirement date. You cannot use both catchup plans in the same year, so choosing the most advantageous one requires a little calculating.

Make a list of your salary and any 457 contributions you made under your current employee for all years from 1979 to the present.

Calculate the maximum amount of money you could have contributed to the 457 for each year. You can do this by multiplying the maximum salary percentage allowed by your adjusted salary of that year. Contributions to your current employer's 401(k) and 403(b) plans are subtracted from your gross salary to calculate adjusted salary for the years 1987 through 2001. After 2001, your adjusted salary is reduced only by any mandatory pretax employee 401 plan contributions. As an example, in 1988, 25 percent of a $30,000 gross salary with $5,000 in 401(k) contributions would be calculated as 0.25 times $25,000, which equals $6,250. If the calculated figure is greater than the maximum amount allowed to be contributed, then simply use the maximum amount.
From 1979 through 1997, you were allowed to contribute 25 percent of your salary, up to $7,500. For the years 1998 through 2000, you were allowed to contribute 25 percent of your salary, up to $8,000. In 2001, you could contribute 25 percent up to $8,500. In years 2002 through 2009, you were allowed to contribute 100 percent of your salary, up to a maximum of $11,000, $12,000, $13,000, $14,000, $15,000, $15,500, $15,500 and $16,500, respectively.

Calculate the amount of undercontributions for each year by subtracting the amount you actually contributed from the maximum amount allowed. This is the amount you missed out on in each of those years.

Add all the undercontributions from each year to calculate the total amount.

Subtract any 457 preretirement catchup contributions you made previously. This will give you the total amount of undercontributions still allowable for catchup.

Subtract the maximum allowable normal 457 contribution of the current year from your adjusted salary. Compare this figure with the total undercontributions still allowable for catchup and the maximum preretirement contribution limit. The lesser of the three is the amount of preretirement catchup you can contribute. In 2010, the maximum amount is $16,500 or 100 percent of your adjusted salary, whichever is less.

Calculate the maximum age 50 catchup contribution by first verifying that you are at least 50 years of age. If not, you cannot use this catchup plan. If you qualify, reference the maximum amount of age 50 catchup contributions, which is $5,500 in 2010. Your total age 50 catchup contribution will be the lesser of this maximum catchup amount or the difference between your adjusted salary and the normal 457 contribution. This is because the maximum 457 contributions, including catchups, cannot exceed your adjusted salary.

Compare the maximum catchup contributions for the age 50 catchup program and the preretirement catchup program. You should use whichever plan allows the greatest contribution, so your catchup contribution will be the greater of the two calculations.
References
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