For most employees, the maximum before-tax contribution in 2007 is $15,500.
If you were age 50 or older in 2007, you can contribute an additional $5,000 before taxes. If you have 15 or more years of service at an eligible institution, you may be able to contribute up to another $3,000 under a special catch-up provision ($15,000 lifetime cap).
Keep in mind the double-tax benefit of 403(b) contributions.
First, all of your contributions go into the plan on a before-tax basis (federal and most states) so your current tax bill will be reduced. Second, all plan accumulations grow tax deferred so any investment earnings are not eroded by current income taxes.
Distribution may be subject to withdrawal restrictions prior to age 59½ and will be subject to ordinary income tax. In addition, a federal 10% additional tax may apply prior to age 59½.
It's easy to join the retirement plan or change your contribution amount.
To begin making 403(b) contributions, you may obtain an enrollment kit by contacting the Human Resources Development Office. You will need to complete an Enrollment Application and Salary Reduction Agreement to get started.
If you already participate in the plan and want to change your contribution amount, you must complete a Salary Reduction Agreement and return it to the Human Resources Development Office for processing.
If you have questions about your 403(b) tax-deferral limits, you can...
If you meet both the age-50- and 15-year- rule criteria certain ordering rules apply if you contribute less than the maximum.
Contributions over the general 402(g) limit will apply first against the $15,500 lifetime limit under the 15-year rule. Contributions in excess of both the general 402(g) limit and 15+ limit are then applied against the age-50 catch-up.
There is no lifetime cap on age-based catch-up contributions. This ordering of the catch-ups generally becomes an issue only if you would like to contribute more than $20,500 but less than the combined $23,500 maximum. In this case, the first additional $3,000 contribution would apply to the service-related catch-up and the remainder to the age-based catch-up contribution, thereby reducing your lifetime cap first.
