Maximum contributions to a 403b
From what I understand if a person is over age 50 and has worked in a school for 15 years he/she can contribute the normal $15,000 plus a $5,000 catch up and an additional max of $3,000.
I also heard that is said teacher is about to retire and has, for example $20,000 in accumulated sick pay, he/she can choose not to take this as a cash settlement and pay tax, but to instead roll this amount into their 403b. This is not ment to count towards the annual contribution limits.
Can someone please confirm if this is the case or not. If so can you direct me to where I might find the rules on this.
Thank You
Permalink Submitted by Alan Spross on Fri, 2007-09-21 03:07
In certain cases, post severance benefits can be contributed to a 403b, but they ARE subject to limits for elective contributions. See attached link:
http://www.mhco.com/Commentary/2005/Post_Severance_Comp_403(b)_111005.htm
For the first part of your post, your understanding is correct, but note that the 3,000 is not an automatic election like a catch up contribution, but is only allowed based on the prior 5 years of contribution activity. In other words, employee must qualify for the 3,000. Finally, the basic elective deferral amount is 15,500 for 2007.
Permalink Submitted by Alan Spross on Fri, 2007-09-21 03:09
Guess the prior link was too long, so you will have to attempt to pull up that page yourself. Sorry.
Permalink Submitted by Mark Rowlette on Tue, 2007-09-25 19:20
Thank you so much for the information it was eztreemly helpfull