The Internal Revenue Code (IRC) establishes specific limits that govern the amounts an individual can contribute to a 403(b) plan. As a result of the federally mandated Economic Growth Tax and Reconciliation Relief Act (EGTRRA), effective January 1, 2002, contribution limits and provisions for 403(b) plans were significantly revised.
Currently, two IRC limits apply: the IRC Section 402(g) "elective deferral limit" and the IRC Section 415(c) "percentage of compensation" limit. For the 2007 tax year, the contribution limit is 100% of adjusted gross income (up to $45,000), or a maximum of $15,500 per year.
Additionally, contributions to a 403(b) plan are not offset by contributions to a 457 plan. For example, for tax year 2007, a participant could elect to contribute up to $15,500 to a 403(b) plan AND up to $15,500 to a 457 plan, for a total contribution of up to $31,000.
IRC Section 414(v), added under the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), created a new catch-up provision available to individuals age 50 or older before the end of the plan year, and allows them to make additional pre-tax elective deferrals to a 403(b) plan over and above the general contribution limits, without regard to previous contributions. This new catch-up rule does not require a calculation worksheet. The maximum amount of this new additional contribution is $5,000 in 2008 for a total of $20,500.
IRC Section 402(g)(7) “catch-up” election permits some long-term employees to contribute an additional $3,000 during the year. If you wish to contribute up to this amount you must demonstrate your eligibility for the catch-up rule by completing a “2008 Maximum Contribution Worksheet to Determine Eligibility for 403(b) Contributions over $15,500”. You may pick up a worksheet at the Human Resource Services, Customer Service Center (CLA Building 98, room B1-20). This worksheet must be completed every year you plan to contribute over the limit.
2006 maximums under this provision: