max contribution limit for a 403b, 457b, and SEP
Dear Alan et al,
I have a client who is >50 years old, works in higher education, and also does self-employment work. I have read the April 2020 article/multiple plan table and here is my understanding for what she can do in 2021:
1. $19,500 salary deferral plus $6,500 catch-up contribution for a total of $26,000 into her 403(b).
2. $19,500 into her 457(b).
3. Depending on her net earnings from self-employment, up to $32,500 into her SEP ($58,000 less the $19,500 salary deferral that she has contributed into the 403b less the $6,000 that her employer will contribute into her 403b). My understanding is that the $6,500 “catch-up” that she made into her 403b would be excluded from this.
Where am I going wrong? #1 and #2 have already taken place but we’re thinking ahead for #3.
Thanks in advance,
Chris
Permalink Submitted by William Tuttle on Mon, 2021-09-06 00:54
A 403b plan is considered controlled by the participant. Therefore, 403b (employee + employer) annual additions must be aggregated with the annual additions to the employer retirement plans of any business > 50% owned by the participant.
457b maximum contributions are separate but equal to the employee deferral limit and are also not included in the annual addition limit.
Permalink Submitted by Alan - IRA critic on Mon, 2021-09-06 01:56
Looks correct to me, except that a separate catch up contribution to the 457b is allowed if the plan permits. Therefore, 457b total contributions can be 26,000.
As your numbers reflect, the client is treated as controlling the 403b plan as well as the SEP, therefore the 58,000 415c limit is 58,000 for both combined. And, yes the catchup is excluded.