401(k) Catch up not calculating correctly when annual limit is crossed in one payroll

Hello,

I am reaching out to discuss an issue we've encountered with the calculation of catch-up contributions in our payroll system, specifically related to the 401(k) and Roth plans.

Recently, we noticed that when an employee reached the annual limit for regular 401(k) contributions, the catch-up for the 401(k) plan incorrectly pulled in the full amount for the deferral instead of just the remaining balance based on the deferral limit. Additionally, the Roth catch-up amount was reduced due to the deferral amount in the 401(k) catch-up.

While the overall contribution amount and the total percentage based on the employee's 401(k) eligible gross wages were correct, the distribution across the different plans wasn't as expected. I've noticed similar issues have been reported by others and appear in the Impact Analysis for the Secure Act's higher catch-up limit UBE.