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If an employee separates after more than 15 years of service with a qu


Guest mruppert

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Guest mruppert

If an employee separates following more than 15 years of service with a qualifies employer what rules apply to the amount of 403-B contribution that may be made in that final year (note: there is no employer contribution).

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There is a catch-up that can be used in the year of separation from service which permits the exclusion allowance to be calculated using the 10 years of service ending on the date of separation. This catch up can replace the normal section 415 limit, and sometimes allows a larger contribution.

There are two conditions, however. First, this catch up can be used ONLY if another 415 catch up hasn't been used in the past. It's quite common to see that the "any year" catch up has been used, making the employee ineligible for the separation from service limit.

Second, the salary reduction contribution is limited to the elective deferral limit of $10,500, unless the employee is eligible for the special elective deferral catch up permitting a salary reduction contribution of as much as $13,500.

Hope this helps.

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