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403(b) and 401(k) Plan?


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Each individual gets just one Sec. 402(g) limit per year: $14,000 in 2005, with a $4,000 catchup addition for someone over the age of 50. The 401(k) elective deferral and the 403(b) salary reduction must be coordinated. Even if an employee participates in more than one plan, he/she can't get more than 1X the annual limit.

If you're talking about the Sec. 415 annual addition limit, however, the answer is "it depends". If a 501©(3) employer pairs a non-ERISA 403(b) arrangement with a qualified plan, the employee gets 2 separate 415 limits. That isn't true, though, for an ERISA-covered 403(b) + a qualified plan.

Lori Friedman

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The 415 limit for a 403(b) plan is the aggregate amount of all contributions to 403(b) plans of all employers in which the employee participates because the employee is deemed to be in control of the plan. See IRC 415k4. I dont know of any way to police this limit.

The 403b plan contributions are aggregated under 415 with any other Qual DC plan or SEP in which the ee has more than 50% control of the employer, e.g., HR-10 plan for self employed person. This limit is also ignored because there is no way for the IRS to keep track of contributions to both plans.

403b contributions are not aggregated under 415 with contributions to a 401a DC plan or 457 plan maintained by the same employer or a separate employer that the employee does not control. An employee can have contributions of 42k to a 403b plan plus 42k to a 401k/DC plan of the same employer or different ers plus 14k to a 457 plan. Only the salary reduction limits to separate 403b plans or 403b and 401k plans are aggregated.

mjb

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If the individual is covered by 2 different plans, sponsored by 2 unrelated employers, each plan has its own Sec. 415 limitation.

This situation is very common when someone has a regular job and is also the sole proprietor of a side business. The individual can be covered by his/her employer's plan and also benefit under a self-employment plan.

Lori Friedman

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