Publication 571 - Tax-Sheltered Annuity Plans (403(B) Plans) For Employees Of Public Schools And Certain Tax-Exempt Organizations Page 10
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37Table 3-5. Worksheet C. Includible Compensation for Your Most Recent
hospital’s annual work period, Jerry has worked
Year of Service*
for the hospital’s entire annual work period.
Jerry’s includible wages (box 1 of Form W-2)
Note: Use this worksheet to figure includible compensation for your most recent year of
from the hospital are shown in the following
service.
chart.
1.
Enter your includible wages from the employer maintaining your 403(b)
66,000
1997 . . . . . . . . . . . . . . . . . . . . . .
$16,000
account for your most recent year of service
$
1998 . . . . . . . . . . . . . . . . . . . . . .
32,000
4,475
2.
Enter elective deferrals for your most recent year of service
$
1999 . . . . . . . . . . . . . . . . . . . . . .
32,000
2000 . . . . . . . . . . . . . . . . . . . . . .
35,000
3.
Enter amounts contributed or deferred by your employer under a cafeteria
0
2001 . . . . . . . . . . . . . . . . . . . . . .
35,000
plan for your most recent year of service
$
Jerry’s employer has set up a 403(b) account
4.
Enter amounts contributed or deferred by your employer to your 457
0
for him. In this account, Jerry has chosen to
account for your most recent year of service
$
invest 8% of his salary each year in mutual funds
5.
Enter the value of qualified transportation benefits you received from your
through payroll reductions. For 2001, this is
0
employer
$
$2,800. Jerry is not using an alternative limit on
6.
Enter your foreign earned income exclusion for your most recent year of
annual additions.
0
service
$
70,475
7.
Add lines 1, 2, 3, 4, 5, and 6
$
Figure Jerry’s years of service. The first
thing Jerry will need to do is figure his years of
8.
Enter the cost of incidental life insurance that is part of your annuity
0
service. In 1997, Jerry worked
1
/
of the year for
2
contract for your most recent year of service
$
his employer. For the years 1998 through 2001,
9.
Enter compensation that was both:
Jerry has been a full-time employee for each of
● Earned during your most recent year of service, and
the hospital’s entire annual work periods.
Jerry’s years of service at the end of 2001
0
● Earned while your employer was not qualified to maintain a 403(b) plan
$
total 4.5 years.
10.
If using this worksheet for 2001, enter contributions that are more than
0
your MEA. Otherwise, enter zero (0)
$
Figure Jerry’s includible compensation.
0
11.
Add lines 8, 9, and 10
$
The second thing for Jerry to figure is his includi-
ble compensation for his most recent year of
12.
Subtract line 11 from line 7. This is your includible compensation for
service. Before he can do this, he must identify
70,475
your most recent year of service
$
his most recent year of service. Jerry is a
*
Use estimated amounts if figuring includible compensation before the end of the year.
full-time employee who works the entire annual
work period. Jerry’s most recent year of service
•
is 2001. Jerry figures his includible compensa-
A retirement plan under which the contri-
tion as shown in Table 3-6.
Figuring MEA for 2001
butions originally were excludable by you
only because your rights to the contribu-
Figure Jerry’s amounts previously excluda-
tions were forfeitable when made, and
You need to figure MEA separately for each
ble. Jerry’s next step is to figure his amounts
which also were excludable by you when
employer who contributed to a 403(b) account
previously excludable. The 8% contributions
your rights became nonforfeitable. (This
for your benefit. When figuring your MEA, do not
made through a salary reduction agreement
does not apply to contributions to
include amounts contributed, compensation, or
equal $9,200.
purchase an annuity contract if your em-
years of service for one employer with those for
ployer was an exempt organization when
another employer. Special rules apply to church
Jerry’s MEA. Using the figures for years of
the contributions were made.),
employees, as explained in chapter 7.
service, includible compensation, and amounts
•
The following example shows how to figure
An eligible section 457 deferred compen-
previously excludable, Jerry can now use Work-
MEA. The facts presented in this example will
sation plan, even if maintained by a sepa-
sheet A to figure his MEA as shown in Table 3-7.
also be used in examples in chapters 4 and 5.
rate employer, or
•
Excess contributions made to your 403(b)
Example
Figuring Jerry’s MAC
account that are more than your limit on
annual additions.
Jerry has been working full time for a local hospi-
Jerry’s MEA for 2001 is $24,820. However, this
tal since the beginning of July 1997. Except for
is not the maximum amount that can be contrib-
For 2001, contributions to a defined benefit
1997, when he worked for one half of the
uted to his 403(b) account. To determine his
plan do not have to be treated as amounts previ-
MAC, Jerry will need to figure his limit on annual
ously excludable. Your employer can tell you if
additions (chapter 4) and his limit on elective
any contributions were made on your behalf to a
deferrals (chapter 5).
defined benefit plan.
Page 10
Chapter 3 Maximum Exclusion Allowance (MEA)
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