(b)lines Ask the Experts – Do 415 Limits Include Age-50 and 15-Year Catch Up Contributions?

“Our 403(b) plan provides for a fairly large employer contribution, which causes some of our employees to be restricted by the 415  combined limit on employer and employee contributions.

“However, I noticed that the software that we use to calculate combined contributions includes the age-50 catch-up contribution and the 15-year catch-up contribution as part of the 415 limit. Is this correct?”  

Stacey Bradford, David Levine and David Powell, with Groom Law Group, and Michael A. Webb, vice president, Retirement Plan Services, Cammack Retirement Group, answer: 

The answer is, “It’s complicated.” 

The general rule is that age 50 catch-up contributions do not count against the Code Section 415(c) limit on annual contributions to a 403(b) plan. See Treasury Regulation Sections 1.415(c)-1(b)(2)(ii)(B) and 1.403(b)-4(b)(2). There is no similar exception for the special 15-year catch-up contribution. Thus, for 2017 for example, the maximum amount of contributions that may be made to a 403(b) plan is $60,000 ($54,000 415 limit + $6,000 in age-50 catch-up contributions). Provided the employer’s contribution is limited to $33,000, a participant could potentially defer up to $27,000 for 2017 ($18,000 in regular deferrals + $3,000 in 15-year catch-up contributions + $6,000 in age-50 catch-up contributions) and still satisfy the 415 limit of $54,000 ($33,000 employer contribution + $18,000 in regular deferrals + $3,000 in special 15-year catch-up contributions). 

However, if the participant chooses not to make the special 15-year catch-up contribution or does not maximize that contribution for the year, any age-50 catch-up contributions the participant makes will be recharacterized as special 15-year catch-up contributions up the applicable limit on 15-year catch-up contributions and the Code Section 415(c) limit. Therefore, it is possible for what the employee thinks are age-50 catch-up contributions to be subject to the Code Section 415(c) limit under a 403(b) plan. 

In addition to our previous Ask the Experts column about the subject, there are several examples under Treasury Regulation Section 1.403(b)-4(c)(5) showing how the two types of catch-up contributions coordinate, including with respect to the Code Section 415(c) limit. Of course, don’t forget that there are some other tricky rules for applying the 415 limit to 403(b) plans and church plans as well.


NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.  

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