403(b) Contribution Limits for 2014 and 2015

Generally, contributions to an employee's 403(b) account are limited to the lesser of:

the limit on annual additions, or
the elective deferral limit

The limit on elective deferrals - the most an employee can contribute to a 403(b) account of salary - is $17,500 in 2014. The elective deferral limit for 2015 will be $18,000.

Employees who are age 50+ at the end of the calendar year can also make catch-up contributions of $5,500 in 2014 and $6,000 in 2015 beyond the basic limit on elective deferrals.

The limit on annual additions (the combination of all employer contributions and employee elective deferrals to all 403(b) accounts) generally is the lesser of:

$52,000 for 2014 ($53,000 for 2015), or
100% of includible compensation for the employee's most recent year of service.

Generally, includible compensation is the amount of taxable wages and benefits the employee received in the employee's most recent full year of service. If you 403(b) plan doesn't limit the total employer and employee contributions to the annual limits, find out how to correct this mistake.

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MinistryCPA - Corey A. Pfaffe, CPA, LLC

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