Contribution Limits for 403(b) and Governmental 457(b)Plans

The 2009 pre-tax contribution limits to both a 403(b) plan and a governmental 457(b) is at $16,500. This means you can contribute as much as $33,000 to tax-deferred plans.

You may be able to contribute even more with catch-up contributions.

1st Year Service Catch-Up Contribution
How long have you been with your school district? If you have worked 15 years or more, you may be eligible for an additional increase in your 403(b) catch-up contribution limit in 2009. Your catch-up contribution limit will be increased by the lowest of the following three amounts:

• $3,000;
• $16,500 minus the total amount of your past 403(b) catch-up contributions and Roth contributions; or
• $5,500 multiplied by total number of years of service, minus the total amount of employer contributions to your 403(b) plan on your behalf.

Please note:

• In 2009, any catch-up contribution for an employee who is eligible for both the age 50 catch-up and the 1st year service catch-up is treated first as a special section 403(b) catch-up to the extent a special section 403(b) catch-up is permitted, and then as an amount contributed as an age 50+ catch-up.
• Your school district may not offer a governmental 457(b) plan. But, as more districts learn about them, they are exploring the possibility. Talk to those who make retirement plan decisions for your district and point out the advantages of being able to contribute to both plans.

This Web site is not intended or written to be used as legal or tax advice. As a taxpayer, you cannot use it for the purpose of avoiding penalties that may be imposed under the tax laws. You should seek advice on legal or tax questions based on your particular circumstances from an independent attorney or tax advisor.

*Statistics compiled from the 2004 Retirement Confidence Survey, Employee Benefit Research Institute; and "Coming Up Short: The Challenge of 401(k) Plans," Alicia Munnell and Annika Sunden