School districts responsible for administering 403(b) plans may also be responsible for communicating with employees regarding eligibility and plan features for the 2011 plan year, including the limits on contributions to 403(b) accounts. The IRS has announced the retirement plan contribution limits that will apply for 2011, and for 403(b) purposes, these limits remain unchanged from 2010. As a result:
- The elective deferral limit for employees remains at $16,500 (plus a service adjustment, if applicable);
- The limit on annual additions to a 403(b) plan (which is the combination of all employer contributions and elective deferrals to an employee’s 403(b) accounts) remains at the lesser of: (1) $49,000; or (2) 100% of the employee’s compensation for the most recent year of service; and
- The additional catch-up contribution permitted for employees age 50 and over remains at $5,500.
Thus, an employee eligible for the additional catch-up contribution for employees age 50 or over could have annual additions of up to $54,500 for 2011, depending on the employee’s compensation.
Contact your Davis & Kuelthau attorney for assistance with 403(b) administration, including communications with employees regarding plan features for 2011.