Publication 571 - Tax-Sheltered Annuity Plans (403(B) Plans) For Employees Of Public Schools And Certain Tax-Exempt Organizations Page 13

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•
Simplified employee pension (SEP) plans,
If you qualify for the 15-year rule, your elective
deferrals under this limit can be as high as
and
$13,500 for 2001 and $14,000 for 2002.
•
5.
All 403(b) plans.
Excess elective deferrals. If the amount con-
tributed is more than the allowable limit, you
must include the excess in your gross income for
Limit on Elective
General Limit
the year contributed. This is explained in chapter
11.
Deferrals
Under the general limit on elective deferrals, the
most that can be contributed to your 403(b)
account through a salary reduction agreement
Figuring the Limit on
for 2001 is $10,500. The limit for 2002 is
Important Changes for
$11,000. This limit applies without regard to
Elective Deferrals
community property laws.
2002
Worksheet F in chapter 13 can be used to figure
Excess elective deferrals. If the amount con-
the limit on elective deferrals.
Increase in the limit on elective deferrals.
tributed is more than the allowable limit, you
Effective for years beginning in 2002, the limit on
must include the excess in your gross income for
Example
elective deferrals has been increased from
the year contributed. This is explained in chapter
$10,500 to $11,000.
11.
Based on the rules in chapters 3 and 4, Jerry
has figured his MEA and his limit on annual
Credit for elective deferrals. Effective for
additions. The last component needed before he
years beginning after 2001, you may be eligible
can determine his MAC for 2001 is the limit on
to take a percentage of your actual elective
15-Year Rule
elective deferrals.
deferrals as a credit. For more information, see
Publication 553.
If you have at least 15 years of service with a
Figuring Jerry’s limit on elective deferrals.
public school system, hospital, home health ser-
Jerry has been employed with his current em-
vice agency, health and welfare service agency,
ployer for less than 15 years. He is not eligible
church, or convention or association of churches
for the special 15-year increase. Therefore, his
You can use this chapter to determine
(or associated organization), and you are an
limit on elective deferrals is $10,500, as shown
!
your limit on elective deferrals for 2001
eligible employee (as described in chapter 1),
in Table 5-1.
and 2002.
CAUTION
the limit on elective deferrals to your 403(b)
account is the least of:
The final component of MAC is the limit on
Figuring Jerry’s MAC
•
elective deferrals. This is a limit on the amount of
$3,000,
contributions that can be made to your account
Jerry has determined his MEA to be $24,820.
•
$15,000, reduced by increases to the gen-
through a salary reduction agreement.
His limit on annual additions is $9,450 and his
eral limit you were allowed in earlier years
A salary reduction agreement is an agree-
limit on elective deferrals is $10,500. Based on
because of this rule, or
ment between you and your employer allowing
this, the maximum amount that could have been
•
for a portion of your compensation to be directly
$5,000 times the number of your years of
contributed to a 403(b) account on Jerry’s behalf
invested in a 403(b) account on your behalf. You
service for the organization, minus the to-
in 2001 is $9,450, the least of the three limits.
can enter into more than one salary reduction
tal elective deferrals made by your em-
All three components are pulled together in
agreement during a year.
Table 5-2.
ployer on your behalf for earlier years.
This chapter discusses:
Table 5-1. Worksheet F. Limit on Elective Deferrals
•
The general limit on elective deferrals, and
Note: Use this worksheet to figure your limit on elective deferrals, which is the last component
•
of your MAC.
The 15-year rule, an increased limit on
elective deferrals.
10,500
1.
Maximum contribution
$
● For 2001, enter $10,500
More than one 403(b) account. If, for
● For 2002, enter $11,000
!
any year elective deferrals are contrib-
uted to more than one 403(b) account
CAUTION
NOTE: If you have at least 15 years of service with a qualifying organization,
for you (whether or not with the same employer),
complete lines 2 through 12; if not, enter (0) on line 11 and go to line 12.
you must combine all the elective deferrals to
5,000
2.
Amount per years of service
$
determine whether the total is more than the limit
3.
Enter your years of service
for that year.
403(b) plan and another retirement plan.
4.
Multiply line 2 by line 3
$
If, during the year, contributions in the form of
5.
Enter the total of all elective deferrals made by your employer on your
elective deferrals are made to other retirement
behalf for earlier years
$
plans on your behalf, you must combine all of
the elective deferrals to determine if they are
6.
Subtract line 5 from line 4; if zero or less, enter (0)
$
more than your limit on elective deferrals. The
15,000
7.
Maximum increase in limit for long service
$
limit on elective deferrals applies to amounts
8.
Enter all prior year increases to the general limit for long service
$
contributed to:
•
9.
Subtract line 8 from line 7
$
401(k) plans, to the extent excluded from
3,000
income,
10.
Maximum additional contributions
$
•
Section 501(c)(18) plans created before
11.
Enter the least of lines 6, 9, or 10. This is the increase in limit for long
0
June 25, 1959, to the extent excluded
service
$
from income,
10,500
12.
Add lines 1 and 11. This is your limit on elective deferrals
$
•
SIMPLE Plans,
Chapter 5 Limit on Elective Deferrals
Page 13

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