Maximum contributions for employees in 457 and 401(a) plans

[Guest PA consultant]

Must you combine employee contributions deferred under a 457 plan with employee contributions made to a 401(a) defined benefit or money purchase plan under a 414(h) pick-up arrangement in determining the maximum contribution to either one? If so, how? And, for the percentage of pay limit, are all of the contributions deducted from gross wages?

[Carol V. Calhoun]

Originally posted by PA consultant

Must you combine employee contributions deferred under a 457 plan with employee contributions made to a 401(a) defined benefit or money purchase plan under a 414(h) pick-up arrangement in determining the maximum contribution to either one?  If so, how?

No. 457 contributions must be combined with 401(k) and 403(B) contributions, but not with 414(h)(2) pick-ups, in applying the 402(g) limits. 414(h)(2) pick-ups are not subject to the 402(g) limits at all, but only to the 415(B) limits (if made to a defined benefit plan) or the 415© limits (if made to a money purchase plan).

And, for the percentage of pay limit, are all of the contributions deducted from gross wages?

For purposes of the 415 limit, only the 414(h)(2) contributions are deducted from gross wages. Code section 415©(3)(D). For purposes of the 457 limit, however, any plan contributions which are excludible from W-2 income (even contributions to the 457 plan itself) are deducted from gross wages. Code section 457(e)(5).