deferral limit

[Guest esw]

My husband and I are both faculty members at a state university in Texas. We make a mandatory 6.65% contribution to the retirement plan, the ORP in our case (we opted out of the state's DB plan). Our mandatory contributions go into a 403(B) plan, to which the state also contributes. We've been told we can each defer the full $11,000 (plus the 50-and-over catchup) over and above the 6.65% we're already putting in. Is that right? I thought the total of all monies from my salary is limited by the $11,000 limit, plus catch-up.

Thanks to anyone who can shed some light on this for me.

[Michael Devault]

You may contribute the full $11,000 (or $12,000 if over 50) into your 403(B) account.

The $11,000 limit is for elective deferrals. Under section 402(g)(3)(D) of the Internal Revenue Code, contributions which are made pursuant to a one-time irrevocable election made at the time of initial eligibility to participate are not considered elective deferrals for measuring the annual limit. Therefore, mandatory contributions to ORP and TRS don't count against the limit.

Hope this is of some benefit to you.

[MWeddell]

If you or your spouse have 15 years of service, then there's another $3,000 catch-up contribution that may be available depending on your past deferral history. Hence, the maximum might be as high as $15,000, $11,000 + $3,000 + $1,000.