Quick Guide to 403(b) Plan Contribution Limits for 2003
 
Basic Rules
Participant Voluntary Contributions may not exceed the lesser of:
Defined Contribution Limits (Section 415)
Elective Deferral Limit (Section 402(g))
Employer Contributions and/or Participant Mandatory Contributions under a single employer may not exceed:
Defined Contribution Limits (Section 415)
Total 403(b) Contributions under a single employer may not exceed:
Defined Contribution Limits (Section 415)
 
Defined Contribution Limits (Section 415)
Contributions may not exceed the lesser of:
100% of Includible Compensation, plus $2,000 extra if the participant is age 50 or over*. For church employees, the 100% limit is replaced by $10,000 if more, with a lifetime limit of $40,000 on such increases.
$40,000, plus $2,000 if the participant is age 50 or over*.
Includible Compensation: equals Adjusted Gross Compensation, less Exclusions from Gross Compensation.
Adjusted Gross Compensation = Gross compensation from current year, plus amounts (if any) from prior years needed to produce the equivalent of compensation for one full year of full-time service.
The most common Exclusions from gross compensation are mandatory contributions to 403(b) plans and/or state retirement systems, and sick/vacation pay received for time off in prior years.
 
Elective Deferral Limit (Section 402(g))
The sum of:
$12,000, plus
$3,000, provided all four of the following conditions are met:
a) The employer is an eligible organization (e.g. public or private school, college or university; not-for-profit hospital; church, etc.);
b) The employee has 15 or more years of service at this employer;
c) Average elective deferrals for this employee under this employer do not exceed $5,000 per year; and
d) The lifetime total of such amounts does not exceed $15,000; plus
$2,000 if the participant is age 50 or over*.
 
*The age 50 bonus is available only if the plan sponsor has approved it. If there is a plan document, an amendment must be made before employees are eligible for the bonus amount.
 
For more information, please refer to IRS Publication 571: Tax-Sheltered Annuity Plans (403(b) Plans) for Employees of Public Schools and Certain Tax-Exempt Organizations, U.S. Government Printing Office, 2002. This item is free; order it using the IRS toll-free forms ordering number (800-829-3676), or download it at http://www.irs.gov.
    
 
 

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