Which of the following statements about catch-up contributions is true?

Catch-up contributions are additional contributions that individuals aged 50 or older can make to their retirement accounts, including 401(k) plans, beyond the standard contribution limits. The statement that catch-up contributions are separately reported from ordinary contributions is accurate.

This separation in reporting is necessary to ensure clarity regarding the amounts being contributed beyond the regular limit, which has specific tax implications and rules associated with them. Reporting catch-up contributions separately allows for more precise tracking of contributions and compliance with IRS regulations. It also helps administrators and participants distinguish between the contributions that fall under standard contribution limits and those made expressly as catch-up contributions.

In contrast, the first statement regarding their inclusion in the total Average Daily Return (ADR) calculation does not apply, as ADR calculations typically do not consider these contributions in the same way. The statement about catch-up contributions being subject to excess deferral regulations is true in general, but specifically, they operate under different guidelines compared to regular contributions. Finally, while catch-up contributions are beneficial to older employees seeking to boost their retirement savings, they do not benefit all eligible employees, as only those who meet the age requirement can make these contributions.