Are employers REQUIRED to allow an employee to contribute $20500 per year to a 403b?
I am aware of at lease one employer that does not adjust the final contribution for thee year, sp one ends up contributing less than $20500.
Obviously the result of incompetent computer programming.
No. Employers are not required. They are free to set the contribution limit to let's say 10% of your pay. In addition, the contribution limits are controlled by federal rules that prevent an employer from discriminating to highly compensated employees. If too many highly compensated employees ($100K in 2007) are contributing compared to the other employees, the plan might have to lower the contribution rate.
Thanx.
In this case, the issue is due to stupid programming. The divide the total pay by the number of paychecks, so folkes are forced to a limit of, say, 20496 or 20497 or 20498 or 20499, instead of
20500.
I thought the limit was $15,500?
Us older farts (50 and over) are allowed to deposit an extra $5,000 in "catch-up" contributions.
It is also possible to contribute more under certain circumstances. There is a provision in the IRC that temporarily increases the elective deferral limit for certain employees. It is known as the 15-year-rule. The provision increases the elective deferral limit by as much as $3,000.
See page 8 of IRS Pub 571 for details.
Thanx. I did not know about pub 571.
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