Special 403(b) Church Group Elections

[Guest Frankie]

I would appreciate if anyone could help clarify two issues:

1. Did EGTRRA repeal the special 415©(7)(B) "$40,000/$10,000" church employee election ? If not....does it really have any practicle implications starting in 2002 with the Sec.415 limit increase to 100% of comp. not to exceed $40,000?

2. Did EGTRRA repeal the special church employee rule that allowed such employee with AGI under $17,000 to replace their exclusion allowance with the lesser of $3000 or their includible compenastion?

[Carol V. Calhoun]

I'm not sure on this one. You might want to try it out on the church plans message board .

[Ellie Lowder]

EGTRRA did repeal the election (IRC 403(B)(2) was repealed in its entirety) that permitted those earning under $17k to contribute 100% of includible compensation; however, the other election (IRC 415©(7)) still exists in changed form. After 1/1/02, IRC 415©(7) will permit a contribution of up to $10,000 (subject to the $40,000 maximum that can be used under this election)even if the participant does not earn $10,000. Thus, an employer (non-salary reduction) contribution could be made for very low-paid clergy and other employees who do not earn enough to contribute much on their own!