catch-up contribution - Investment & Finance Definition
The additional money that can be contributed to a 401(k) retirement plan that is offered to employees. The catch-up contribution was allowed as part of the Economic Growth and Tax Relief Reconciliation Act passed in 2001. The law allows employees age 50 and older to contribute an extra $2,000 in 2003 on a pre-tax basis. The catch-up contribution will increase $1,000 per year until it reaches $5,000 in 2005. Many employers will not match the catch-up contribution, however.