Employees Of Non-Profit Organizations
Hold your horses! As good as contributing to a 403(b) plan sounds, there are a lot of rules and limitations to it. For one, the limit (for 2007, at least) is a total annual contribution of $15,500. You won’t be allowed to contribute past that amount. With all the benefits of contributing to your 403(b), it won’t come as any surprise if you’re eager to put in more. The good news is that you can. See if you fit any of the descriptions below because, if you do, then you have the opportunity to extend your 403(b) contribution limits.
Although that is the umbrella term usually given to them, this classification also includes employees of schools and educational institutions such as teachers, librarians, researchers and the like. Section 501(c) of the Internal Revenue code enumerates the occupations that fall under this category. Take note, though, that you would have to have had at least 15 years (they need not be consecutive) of service with that employer to qualify for the contribution limit increase.
Those who fall into this category are eligible for something called the 15-Year Rule or Lifetime Catch-up. They can increase their deferral limit (the maximum amount that can be deferred from their salary and then contributed into their 403(b) by as much as $3,000 per year, with a maximum additional contribution of $15,000 for that person’s lifetime.
50+ Employees
Employees who are 50 years old and older may also take advantage of another deferral limit increase. Beginning with the year wherein they’ll turn 50, employees in this category can avail of a $5,000 increase in their annual deferral limit, bringing it to a total of $20,500 in contributions per year. Unlike the increase under the 15-Year Rule, the increase given by the Age 50+ Catch-up is permanent. What’s more, employees who can qualify for both categories can avail of both deferral limit increases simultaneously. Doing so will allow them to defer as much as $23,500 a year into their 403(b) for the time frame given by the 15-Year Rule.
Apart from setting your preferences (such as that for the percentage to be deferred from your salary), your 403(b) is in your employer’s hands. Handling the funds and taking care of the paperwork is part of your employer’s duties. If you wish to thoroughly plan out how to go about contributing to your 403(b), your employer or your company’s finance division should be your first stop. And you’d better get cracking, too. With 403(b) savings, an earlier beginning means a more fulfilling conclusion.
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