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Quick Guide to 403(b) Plan Contribution Limits for 2004
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Basic Rules
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| Participant Voluntary Contributions may not exceed the lesser of: |
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Defined Contribution Limits (Section 415)
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Elective Deferral Limit (Section 402(g))
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| Employer Contributions and/or Participant Mandatory Contributions under a single employer may not exceed: |
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Defined Contribution Limits (Section 415)
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| Total 403(b) Contributions under a single employer may not exceed: |
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Defined Contribution Limits (Section 415)
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Defined Contribution Limits (Section 415)
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| Contributions may not exceed the lesser of: |
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100% of Includible Compensation, plus $3,000 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.
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$41,000, plus $3,000 if the participant is age 50 or over*.
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| Includible Compensation: equals Adjusted Gross Compensation, less Exclusions from Gross Compensation. |
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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.
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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.
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Elective Deferral Limit (Section 402(g))
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| The sum of: |
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$13,000, plus
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$3,000, provided all four of the following conditions are met:
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a) The employer is an eligible organization (e.g. public or private school, college or university; not-for-profit hospital; church, etc.);
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b) The employee has 15 or more years of service at this employer;
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c) Average elective deferrals for this employee under this employer do not exceed $5,000 per year; and
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d) The lifetime total of such amounts does not exceed $15,000; plus
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$3,000 if the participant is age 50 or over*.
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| *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. |
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| 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. |
