Absolute maximum annual amount that hospital employee can theoretically defer in 2006

[Guest progressivejoe]

$59,000/$74,000.

A 501(c )(3) hospital has a 403(b) tax-sheltered annuity plan and a 457(b) deferred compensation plan.

In 2006, a 50+ year old employee can contribute $20,000 ($15,000 max + $5,000 catch-up) to the 403(b) plan. In addition, the employer could theoretically separately contribute (assuming discrimination reqs can be met which is a big assumption) $29,000 to the 403(b) plan to max out the 415(c ) annual additions limit for 2006 of $44,000.

The 457(b) plan does not need to take into consideration the $44,000 annual additions limit. Thus, the employee could defer $15,000 to the 457(b) plan over and above the 403(b) contributions. (The 414(v) catch-up allowance is not available since this is not a governmental employer, but if it were, the employee could contribute $20,000 each to the 457(b) and 403(b) plans.) Thus, the total amount that can potentially be deferred by the hospital employee is $59,000.

If the employee is in his final three years before retirement (and assume he's a long-term employee who has been eligible but never contributed to the 457 before) he can double his max 457(b) deferral to $30,000, bringing the total potentially deferred in 2006 to $74,000.

Am I missing anything?