[V079] Late-Career Series: Retirement Catchup Contribution Limits for Mississippi PERS Members
Transcript
Introduction to Deferred Comp 457(b) and Tax-sheltered Annuity 403(b) Catch-up Contributions for Mississippi Public Employees
If you are a Mississippi public employee in your 50s or early 60s, you might look at your upcoming retirement and wonder: “Have I set aside enough outside my PERS pension to retire comfortably, travel, or handle unexpected healthcare expenses?”.
Most PERS members know they can contribute to voluntary supplemental savings, such as deferred comp or 403(b) plans, alongside their pension. But few may realize that these supplemental plans offer powerful, accelerated catch up contribution provisions designed specifically to help late career public employees supersize their retirement balances right before retirement.
What to Expect in Today’s Video
In today's video, we are breaking down everything you need to know about these special retirement catch-up contributions.
Section 1: We will cover Mississippi Deferred Comp 457(b) catch-up contribution limits.
Section 2: We will cover tax-sheltered annuity 403(b) catch-up contribution limits.
Section 3: We will show how much these catch-up contributions can grow over time before you retire.
Section 4: We will provide three steps you can take today to optimize your catch-up contributions.
How to Get Personalized Advice
As you watch this video, keep in mind that these figures and calculations are provided for illustrative and educational purposes only and are not personalized tax, legal, or financial advice.
However, I am a vested PERS member and financial planner who specializes in comprehensive retirement planning for Mississippi public employees. If you want personalized guidance on whether you should make catch-up contributions, how much you can afford to defer, and how to coordinate your supplemental savings with your future PERS pension, you can schedule an introduction with me by simply clicking the link in the show notes below.
Mississippi Deferred Compensation 457(b) Contribution and Catch-Up Limits (2026)
Now let's unpack the rules for deferred compensation catch-up contributions.
For any PERS employee under the age of 50, the baseline IRS elective deferral limit for a 457(b) plan is $24,500 per year or up to 100% of your covered compensation, whichever is less. There is no catch up contribution available while you are under age 50.
Beginning in the calendar year you turn age 50, the IRS allows an additional age-based catch-up contribution of $8,000, raising your total annual elective deferral limit to $32,500.
Beginning in the calendar year, you turn age 60 and continuing through the year you turn 63, the IRS allows an additional super catch-up contribution. In this special four-year window, the additional super catch-up contribution increases from $8,000 to $11,250, giving you a maximum annual contribution limit of $35,750.
Once you turn age 64, your additional catch up contribution reverts back to the standard age 50 plus catch-up contribution limit of $8,000, giving you a maximum annual contribution limit of $32,500.
During the three consecutive calendar years ending prior to the year you reach your plan's normal retirement age, such as attaining full PERS unreduced retirement eligibility given your PERS tier, you may defer up to double the standard annual limit, equating to $49,000 per year. However, to utilize this $49,000 annual special pre-retirement catch-up contribution limit, you must have underutilized contribution space from prior years of eligible service where you did not contribute the maximum allowed.
Note that IRS rules prohibit combining the special pre-retirement catch-up with the age 50 plus or age 60 to 63 super catch-up in the same year. You simply want to utilize whichever catch-up yields the higher dollar amount.
Tax-Sheltered Annuity 403(b) Contribution and Catch-up Limits (2026)
In addition to Mississippi Deferred Comp, many PERS employers, particularly public school districts, community colleges, and state universities, also offer voluntary 403(b) tax sheltered annuity retirement plans. Understanding how 403(b) limits work is critical because Internal Revenue Code rules treat 457(b) and 403(b) accounts under separate statutory limits.
Let's look at the standard limits, age-based catch up limits, and the specialized 15-year service rule for 403(b) accounts.
While under age 50, just like deferred comp, the baseline employee elective deferral limit for a 403(b) plan participant is $24,500 per year with no additional catch-up contribution permitted.
For participants who reach age 50 or older during the calendar year, the standard catch-up contribution adds $8,000, allowing you to defer up to $32,500 per year to your 403(b).
For participants who reach age 60, like deferred comp, 403(b) plans are permitted to offer a super catch-up limit of $11,250 through age 63, increasing the total annual deferral limit to $35,750.
Once you turn age 64, like deferred comp, your 403(b) additional catch-up contribution reverts back to the standard age 50 plus catch-up limit of $8,000, giving you a maximum annual contribution limit of $32,500.
If you have completed at least 15 years of full-time service with the same public school district, university, or qualifying employer, your plan may allow an additional catch up contribution of up to $3,000 per year up to a $15,000 lifetime maximum. Unlike the 457(b) pre-retirement rule, which forces you to choose between age based or pre-retirement limits, the 403(b) 15 year service catch-up can actually be stacked with your age-based catch-up if your plan permits it, with the 15-year service deferral applied first.
And finally, make special note here that if your employer offers both a 403(b) and the Mississippi Deferred Comp 457(b) plan, you can participate in both plans simultaneously and take advantage of both catch-up contributions in the same year.
How Much Retirement Catch-Up Contributions Can Grow Until Retirement
The next logical question every PERS member should be asking themselves is “If I max out these catch-up contributions, what will actually amount to by the time I retire?”.
To answer this, we modeled an active PERS member who:
Starts making and maxing out catch-up contributions beginning at age 50,
Saving and investing at the end of every month until retirement.
To give you an objective inflation-adjusted perspective, we modeled these contributions using two real-world Vanguard funds that are available in the Mississippi Deferred Compensation Plan:
Our conservative scenario was invested in the Vanguard Target Retirement 2030 Fund, ticker VTHRX, and assumed a 3% annual real rate of return.
Our growth scenario was invested in the Vanguard Target Retirement 2065 Fund, ticker VLX VX, assuming a 7% annual real rate of return.
Keep in mind that this modeling is for educational and illustrative purposes only, and past performance does not guarantee future results.
In this table:
The first column shows age.
The second column shows the number of years catch-up contributions were made.
The third column shows the total amount of the catch-up contributions.
The fourth column shows what the balance would be at the end of that age in today's dollars, assuming the conservative scenario.
And the fifth column shows what the balance would be at the end of that age in today's dollars, assuming the growth scenario.
If you allocate conservatively into a fund like Vanguard Target Retirement 2030, which holds an asset mix weighted more towards bonds, your catch-up contributions compound to:
$52,520 by age 55,
Surpass six figures to $107,401 by age 60, and
Reach $178,674 by age 65 that represents $37,674 in growth, delivering an inflation-adjusted total return of 27%.
If you allocate aggressively by investing in a fund like Vanguard Target Retirement 2065, which holds an asset mix weighted more towards stocks, your catch-up contributions compound more quickly.
By age 58, your balance approaches six figures at $99,906.
By age 62, it reaches $179,702.
And by age 65, your catch up contributions total $252,038, generating $111,038 in growth, delivering an inflation adjusted total return of nearly 79%.
Comparing the two portfolios reveals the profound impact of your investment strategy. While the conservative portfolio provides steady lower volatility growth that yields nearly $179,000, the growth portfolio generates an additional $73,364 in retirement by age 65 from the exact same $141,000 in out-of-pocket contributions. Whether you achieve $178,000 or $252,000, this accumulated balance provides PERS retirees with a dedicated pool of money to access an early retirement years before you claim Social Security and or are eligible for Medicare.
And keep in mind that these figures are only accounting for the catch up contributions, not the base contributions, of $24,500 per year, which would further drive these balances up significantly.
Action Items for Mississippi Public Employees
So, what should you do knowing this information? Here are three concrete actionable steps Mississippi public employees can take today to take advantage of catch-up contributions.
Audit your prior contribution history. Log into your Empower Mississippi Deferred Comp portal or contact plan customer service to calculate your underutilized limits from previous years to see if you qualify for the $49,000 three year pre retirement catch-up.
Verify employer plan offerings and 15-year rule. Check with your HR or payroll department to see if your district or agency offers both a 457(b) and a 403(b) plan. If you have 15 plus years of service with the same employer, ask if they support the special $3,000 annual 15-year service catch-up.
Align your catch-up asset allocation. Determine whether your supplemental savings need conservative stability or higher capital growth, model your estimated take-home pay, and ensure your portfolio matches your planned retirement date.
Preview of Next Video and Closing Remarks
I hope this video gives you clarity on the incredible catch-up contribution opportunities available to late career Mississippi public employees. Taking full advantage of these rules in your 50s and 60s can add hundreds of thousands of dollars to your retirement nest egg alongside your PERS pension.
In our next video, "Why PERS Members Should File Form 16 Advanced Application", we will cover everything you need to know about how to make sure your survivor benefits are paid out as you wish in the event you pass away before retirement and what happens if you don't file Form 16.
Please make sure you subscribe so you don't miss this and other upcoming videos in our late career series. If you found this video helpful, you can thank me by hitting the thumbs up button and sharing it with others.
And finally, if you're looking for a financial planner who specializes in helping Mississippi public employees build comprehensive retirement strategies, including modeling catch up contributions and coordinating supplemental savings with your PERS pension, please visit our website at www.perspro.ms to learn more about how we help PERS members like you.
Thank you for your valuable public service to the state of Mississippi. We'll see you next time.
Legal Disclaimer
Disclaimer: This video is for educational and informational purposes only. Neither the host nor this YouTube channel are officially affiliated with, endorsed by, or sponsored by the Public Employees Retirement System of Mississippi. Always consult a qualified professional for personal advice specific to your situation.
