Publication 571 - Tax-Sheltered Annuity Plans (403(B) Plans) Page 4
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21Depending upon the type of contributions made
How Much Can Be
to your 403(b) account, only one of the limits
3.
may apply to you.
Contributed to My
Which limit applies. Whether you must apply
403(b) Account?
one or both of the limits depends on the type of
Limit on Annual
contributions made to your 403(b) account dur-
ing the year.
There are limits on the amount of contributions
that can be made to your 403(b) account each
Additions
Elective deferrals only. If the only contri-
year. If contributions made to your 403(b) ac-
butions made to your 403(b) account during the
count are more than these contribution limits,
year were elective deferrals made under a sal-
penalties may apply.
ary reduction agreement, you will need to figure
The first component of MAC is the limit on an-
Chapters 2
through
6
provide information on
both of the limits. Your MAC is the lesser of the
nual additions. This is a limit on the total contri-
how to determine the amount that can be con-
two limits.
butions (elective deferrals, nonelective
tributed to your 403(b) account.
contributions, and after-tax contributions) that
Nonelective contributions only. If the only
Worksheets are provided in
Chapter 9
to
can be made to your 403(b) account. The limit
contributions made to your 403(b) account dur-
help you determine the maximum amount that
on annual additions generally is the lesser of:
ing the year were nonelective contributions (em-
can be contributed to your 403(b) account each
•
ployer contributions not made under a salary
year.
Chapter 7, Excess
Contributions, de-
$49,000 for 2011 and $50,000 for 2012, or
reduction agreement), you will only need to fig-
scribes how to prevent excess contributions and
•
100% of your includible compensation for
ure the limit on annual additions. Your MAC is
how to get an excess contribution corrected.
your most recent year of service.
the limit on annual additions.
Elective deferrals and nonelective contri-
More than one 403(b) account. If you
butions. If the contributions made to your
!
contributed to more than one 403(b)
403(b) account were a combination of both elec-
account, you must combine the contri-
tive deferrals made under a salary reduction
CAUTION
2.
butions made to all 403(b) accounts on your
agreement and nonelective contributions (em-
behalf by your employer.
ployer contributions not made under a salary
reduction agreement), you will need to figure
Ministers and church employees. If you
both limits. Your MAC is the limit on the annual
Maximum
are a minister or a church employee, you may be
additions.
able to increase your limit on annual additions or
You need to figure the limit on elective defer-
use different rules when figuring your limit on
rals to determine if you have excess elective
Amount
annual additions. For more information, see
deferrals, which are explained in
chapter
7.
chapter
5.
Worksheets. Worksheets are available in
Participation in a qualified plan. If you par-
Contributable
chapter 9
to help you figure your MAC.
ticipated in a 403(b) plan and a qualified plan,
you must combine contributions made to your
(MAC)
403(b) account with contributions to a qualified
plan and simplified employee pensions of all
When Should I Figure
corporations, partnerships, and sole proprietor-
ships in which you have more than 50% control.
Throughout this publication, the limit on the
My MAC?
You can use Part I of
Worksheet 1 in chapter
amount that can be contributed to your 403(b)
9
to figure your limit on annual additions.
account for any year is referred to as your maxi-
At the beginning of 2012, you should refigure
mum amount contributable (MAC). This chapter:
your 2011 MAC based on your actual compen-
•
Introduces the components of your MAC,
sation for 2011. This will allow you to determine
Includible
if the amount that has been contributed to your
•
Tells you how to figure your MAC, and
403(b) account for 2011 has exceeded the al-
•
Compensation for Your
Tells you when to figure your MAC.
lowable limits. In some cases, this will allow you
to avoid penalties and additional taxes. See
Most Recent Year of
chapter
7.
Generally, you should figure your MAC for
Service
Components of Your
the current year at the beginning of each tax
year using a conservative estimate of your com-
MAC
Definition. Generally, includible compensa-
pensation. If your compensation changes during
tion for your most recent year of service is the
the year, you should refigure your MAC based
amount of taxable wages and benefits you re-
on a revised conservative estimate. By doing
Generally, before you can determine your MAC,
ceived from the employer that maintained a
this, you will be able to determine if contributions
you must first figure the components of your
403(b) account for your benefit during your most
to your 403(b) account can be increased or
MAC. The components of your MAC are:
recent year of service.
should be decreased for the year.
•
When figuring your includible compensation
The limit on annual additions
(chapter
3),
for your most recent year of service, keep in
and
mind that your most recent year of service may
•
The limit on elective deferrals
(chapter
4).
not be the same as your employer’s most recent
annual work period. This can happen if your tax
year is not the same as your employer’s annual
work period.
How Do I Figure My
When figuring includible compensation for
your most recent year of service, do not mix
MAC?
compensation or service of one employer with
compensation or service of another employer.
Generally, contributions to your 403(b) account
Most Recent Year of Service
are limited to the lesser of:
•
The limit on annual additions, or
Your most recent year of service is your last full
•
The limit on elective deferrals.
year of service, ending on the last day of your
Chapter 3 Limit on Annual Additions
Page 4
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