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Richard Parker

Maximum Contributions With 2 403(b) Plans?

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Under a defined contribution plan, the maximum annual contribution on behalf of any plan participant may not exceed $45,000 for 2007. If I have a 403(b) mandatory (TAMRA) plan and a supplemental unmatched TDA plan, must I combine them to test for the total $45,000 cap?

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Treasury Reg. 1.415-6(d)(1) indicates that all 403(b) contracts of a single employer are aggregated for purposes of the 415 limit (though, interestingly enough, 401(a) plans are not aggregated with 403(b)s for this purpose). Thus, if both 403(b) contracts are maintained by the same employer, the maximum that may be contributed to both plans combined is $45,000 total ($50,000 total if you are age 50 or older, since the age-50 catch up does not count against the 415 limit). Of course, a seperate limit on voluntary salary deferrals of $15,500 applies for 2007, regardless of the number of plans/employers.

 

 

Under a defined contribution plan, the maximum annual contribution on behalf of any plan participant may not exceed $45,000 for 2007. If I have a 403(b) mandatory (TAMRA) plan and a supplemental unmatched TDA plan, must I combine them to test for the total $45,000 cap?

Thank you and Happy New Year.

 

 

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For purposes of aggregating plans under Section 415, the EMPLOYEE is considered by law to control all 403(b) plans. So all 403(b) plans, regardless of which employer sponsors them, are subject to a single $45,000 limit.

 

The reason 401(k), 401(a), and other such plans have a separate $45,000 cap is that the EMPLOYER is deemed the controller of those plans, while the EMPLOYEE is deemed the controller of the 403(b) plan. Separate controller means separate limit.

 

So if both of your plans are 403(b) plans, they do still have a combined limit of $45,000 (plus an extra $5000 as BenefitsGeek says, if you are 50 or older). This is true regardless of whether contributions are voluntary or mandatory. Of course, BenefitsGeek is also correct in adding that voluntary employee contributions are capped by the lower elective deferral limit, and that limit is a combined limit for ALL employer-plans you participate in, except for 457 plans.

 

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