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Governmental 457b annual additions limit


WCC

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I don't have much experience with 457b governmental plans and a recent discussion has me confused.

What is the annual additions limit to a governmental 457b? For example, an employee defers $23,000 to the plan for 2013 (catch up eligible). The employer matches 100% on first 3% deferred. Based on his compensation the match would be $3,000. Total contribution would then be $26,000.

However, for some reason I was thinking the annual additions limit was $23,000 (assuming catch eligible) including both employee and employer contributions. Therefore, I am confused on what is the annual additions limit in a 457b governmental plan?

Thanks for the help.

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You are correct. Unless the special last 3-years catch-up applies, the $17,500 limit applies to a combined total of employee plus employer vested allocations for the year. The Age 50 catch-up of $5,500 is a deferral, so you wouldn't be able to an allocation $23,000 without the age 50 employee deferral of at least $5,500.

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One way of getting around this issue is to have the matching contributions made to a 401(a) plan, instead of to the 457(b) plan. That way, the employer contribution would not be counted toward the limit.

Employee benefits legal resource site

The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

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  • 8 months later...

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