Basic Annual Limit - $16,500 for 2009 and 2010 
The 2009 and 2010 calendar year limits for elective deferrals are defined as 100% of compensation up to $16,500 total. This limit applies to all employees.


Service Based “Catch-up” Limit - 403(b) Only
Employees with fifteen or more years of service with the school district may be eligible for a special higher annual limit of $19,500 ($3,000 additional per year). To qualify, a participant’s prior average annual contributions must not exceed $5,000 per year. This extra annual amount of $3,000 per year is capped at a cumulative limit of $15,000. The participant’s age is not a factor for determining eligibility for this higher limit. Employees that qualify for this catch up must take this amount prior to taking advantage of the Age-Based Catch-up. The special Catch-Up provision is calculated and used prior to using the Age-Based additional amount.


Age Based Additional Amount

• Employees who are age 50 or older by December 31, 2010 may contribute an additional $5,500 above the basic 2010 annual limit of $16,500 for a total of $22,000.
  

• The participant’s years of service with the school district or college is not a factor in determining eligibility for this higher limit.
   

• Employees who contribute to both a 403(b) and 401(k) account are limited to one age-based additional amount per year between the accounts. 457(b) accounts also have an Age-Based additional amount that does not offset the 403(b) and/or 401(k) amount.

Contribution Accounting Formula

• Step 1: The Basic Annual Amount is reduced by the following

  • Contributions made to all plans of the employer, excluding 457(b) – which may be 401(k).
  • 403(b) contributions made to other employer plans,
  • Contributions to SEP or 401(k) in which the employee would have a 50% interest.
• Step 2: Employees eligible for the  Service Based catch-up must apply this amount prior to utilizing the Age Based Catch up.
• Step 3: The eligible age based limitation is applied to the final basic annual limitation.

 These rules are explained further in IRS Publication 571.

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Participants should seek further information regarding their MAC limit each year from their account representative or professional advisor. Click here to go to our online MAC Calculator.
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