Publication 571 - Tax-Sheltered Annuity Plans (403(B) Plans) For Employees Of Public Schools And Certain Tax-Exempt Organizations Page 2

As this publication was being prepared

help bring these children home by looking at the

Important Changes for

for print, Congress was considering

photographs and calling 1 – 800 – THE – LOST

legislation that would allow foreign mis-

(1 – 800 – 843 – 5678) if you recognize a child.

CAUTION

2002

sionaries to include contributions made by the

church during the year to your 403(b) account in

includible compensation.

Maximum amount contributable (MAC). For

Introduction

tax years beginning after 2001, your MAC is the

Catch-up contributions for persons age 50 or

lesser of the limit on annual additions, or the limit

This publication can help you better understand

over. If you are age 50 or over, you may be

on elective deferrals. See chapter 9.

the tax rules that apply to your 403(b) (tax-shel-

permitted to make additional catch-up contri-

tered annuity) plan.

Repeal of the maximum exclusion allowance

butions, of up to $1,000 to your 403(b) plan for

In this publication you will find information to

(MEA). For tax years beginning after 2001,

2002. See chapter 10.

help you:

you will not need to figure your MEA to deter-

mine the maximum amount that can be contrib-

Credit for elective deferrals. For tax years

•

Determine the maximum amount that can

uted to your 403(b) account (your MAC). See

beginning after 2001, you may be eligible to take

be contributed to your 403(b) account in

chapter 9.

a percentage of your actual elective deferrals as

the current year,

a credit. For more information, see Publication

•

Repeal of the minimum exclusion allowance

Determine the maximum amount that

553, Highlights of 2001 Tax Changes.

for church employees. For tax years begin-

could have been contributed to your

ning after 2001, church employees can no

Exception to rollover rules. For distributions

403(b) account in the previous year,

longer use the minimum exclusion allowance to

after 2001, the IRS may waive the 60-day roll-

•

Identify excess contributions,

figure the maximum amount that can be contrib-

over period if the failure to waive such require-

•

uted to a 403(b) account. See chapter 9.

ment would be against equity or good con-

Determine the contribution limits for years

in which contributions are made to both a

science, including cases of casualty, disaster, or

Repeal of the alternative limits on annual

403(b) plan and a 457 plan, and

other events beyond the reasonable control of

additions. For tax years beginning after 2001,

•

the individual. See chapter 12.

the year of separation from service limit, the any

Understand the basic rules for distribu-

year limit, and the overall limit can no longer be

tions and rollovers from 403(b) accounts.

Direct trustee-to-trustee transfers. If you

used to figure the limit on annual additions. See

make a direct trustee-to-trustee transfer after

chapter 9.

This publication does not provide specific in-

2001 from your governmental 403(b) account to

formation on the following topics.

a defined benefit governmental plan, it may not

Repeal of the coordination rules between

•

be included in your gross income. For more

403(b) plans and 457 plans. For tax years

Distributions from 403(b) accounts. This is

beginning after 2001, in the year you contribute

information, see chapter 12.

covered in Publication 575, Pension and

to both a 403(b) plan and a 457 plan, you do not

Annuity Income.

Rollover options. For distributions after

reduce the maximum deferral limit of the 457

•

Rollovers. This is covered in Publication

2001, you can roll over, tax free, money and

plan by the amount of contributions made to

590, Individual Retirement Arrangements

other property that would otherwise be taxable

your 403(b) account. If you contribute to a 457

(IRAs).

from an eligible retirement plan to a 403(b) plan.

plan in 2002, see your plan administrator for

For more information, see Publication 575.

contribution limits. See chapter 9.

How to use this publication. This publication

Additionally, you can roll over, tax free,

Increase in the limit on annual additions.

is organized into chapters to help you find infor-

money and other property that would otherwise

For tax years beginning after 2001, the limit on

mation easily.

be taxable from a 403(b) plan to an eligible

annual additions under the general rule is the

retirement plan. For more information see chap-

Chapter 1 answers questions frequently

lesser of $40,000 or 100% of your includible

asked by 403(b) plan participants.

ter 12.

compensation for your most recent year of ser-

Chapters 2 through 8 explain the rules and

vice. This is an increase from the lesser of

Rollovers by the surviving spouse. If you

terms you need to know to figure the maximum

$35,000, or 25% of your compensation for the

are the surviving spouse of a 403(b) plan partici-

amount that could have been contributed to your

limitation year. See chapter 9.

pant, you can roll over distributions made after

403(b) account for 2001.

2001 from your spouse’s 403(b) plan to an eligi-

Increase in the limit on elective deferrals.

Chapter 9 explains how to determine the

ble retirement plan. For more information see

For 2002, the limit on elective deferrals has been

maximum amount that can be contributed to

chapter 12.

increased from $10,500 to $11,000. See chapter

your 403(b) account (your MAC) for 2002. Chap-

ter 9 explains recent changes and provides ex-

amples to assist you in figuring your MAC for

Includible compensation used to determine

2002.

Important Reminders

your limit on annual additions. For tax years

Chapter 10 explains the requirements for the

beginning after 2001, when figuring the limit on

new catch-up contributions.

annual additions you will use includible compen-

Includible compensation. Your includible

Chapter 11 provides general information on

sation for your most recent year of service and

compensation for your most recent year of ser-

the prevention and correction of excess contri-

not your compensation for the limitation year.

vice includes the value of qualified transporta-

butions to your 403(b) account.

See chapter 9.

tion fringe benefits received from your employer.

Chapter 12 provides general information on

See chapter 3.

Includible compensation after a termination

distributions and rollovers.

from service. For tax years beginning after

Chapter 13 provides blank worksheets that

Compensation. Your compensation for pur-

2001, your includible compensation for your

you will need to accurately and actively partici-

poses of figuring your limit on annual additions,

most recent year of service will not include

pate in your 403(b) plan. Filled-in samples of

for 2001, includes the value of qualified trans-

amounts received from a former employer after

most of these worksheets can be found through-

portation fringe benefits received from your em-

the fifth year following the year in which your

out this publication.

ployer. See chapter 4.

employment is terminated. See chapter 9.

Comments and suggestions. We welcome

Photographs of missing children. The Inter-

Includible compensation for foreign mis-

your comments about this publication and your

nal Revenue Service is a proud partner with the

sionaries. For tax years beginning after 2001,

suggestions for future editions.

National Center for Missing and Exploited Chil-

if you are a foreign missionary, your includible

You can e-mail us while visiting our web site

dren. Photographs of missing children selected

compensation does not include contributions

made by the church during the year to your

by the Center may appear in this publication on

403(b) account. See chapter 9.

pages that would otherwise be blank. You can

You can write to us at the following address:

Page 2

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