AN MEA IS THE MAXIMUM THAT YOU CAN PUT INTO A 403B DURING ANY CALENDER YEAR.
3 PAGE GUIDE FOR HELP WITH MAXIMUM EXCLUSION ALLOWANCE CALCULATIONS
The maximum for a 403b account is a very challenging figure to ascertain. It is based on several parts of the Internal Revenue code. However the higher ones salary more likely they are to be in the $10,000 Range.
year to 2000 maximum is $10,500. for the year this is know as the 402g limit
Some people can utilize the catch up provision which states that if one has been employed by the same employer for 15 consecutive years that they can put in an additional $3000.00 per year up to a maximum of $15,000.00 total. <
BELOW YOU FIND THE INTERNAL REVENUE CODE WHICH IS IS INCLUDED TO HELP CALCULATED ONES MAXIMUM FOR A 403B PLAN.
A GREAT PUBLICATION RESOURCE IS TO GO TO WWW.IRS.GOV WHICH PROVIDES PUBLICATIONS ON TSA PLANS.
501(C)(3) ORGANIZATIONS "Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office."
TITLE 26, SUBTITLE A, CHAPTER 1 SUBCHAPTER D, PART I SUBPART B, SECTION 415 STATUTE (a)General rule (1)Trusts A trust which is a part of a pension, profitsharing, or stock bonus plan shall not constitute a qualified trust under section 401(a) if - (A)in the case of a defined benefit plan, the plan provides for the payment of benefits with respect to a participant which exceed the limitation of subsection (b), (B)in the case of a defined contribution plan, contributions and other additions under the plan with respect to any participant for any taxable year exceed the limitation of subsection (c), or (C)in any case in which an individual is a participant in both a defined benefit plan and a defined contribution plan maintained by the employer, the trust has been disqualified under subsection (g). (2)Section applies to certain annuities and accounts In the case of - (A)an employee annuity plan described in section 403(a), (B)an annuity contract described in section 403(b), or (C)a simplified employee pension described in section 408(k), such a contract, plan, or pension shall not be considered to be described in section 403(a), 403(b), or 408(k), as the case may be, unless it satisfies the requirements of subparagraph (A) or subparagraph (B) of paragraph (1), whichever is appropriate, and has not been disqualified under subsection (g). In the case of an annuity contract described in section 403(b), the preceding sentence shall apply only to the portion of the annuity contract which exceeds the limitation of subsection (b) or the limitation of subsection (c), whichever is appropriate, and the amount of the contribution for such portion shall reduce the exclusion allowance as provided in section 403(b)(2). (b)Limitation for defined benefit plans (1)In general Benefits with respect to a participant exceed the limitation of this subsection if, when expressed as an annual benefit (within the meaning of paragraph (2)), such annual benefit is greater than the lesser of - (A)$90,000, or (B)100 percent of the participant's average compensation for his high 3 years. (2)Annual benefit (A)In general For purposes of paragraph (1), the term ''annual benefit'' means a benefit payable annually in the form of a straight life annuity (with no ancillary benefits) under a plan to which employees do not contribute and under which no rollover contributions (as defined in sections 402(c), 403(a)(4), and 408(d)(3)) are made. (B)Adjustment for certain other forms of benefit If the benefit under the plan is payable in any form other than the form described in subparagraph (A), or if the employees contribute to the plan or make rollover contributions (as defined in sections 402(c), 403(a)(4), and 408(d)(3)), the determinations as to whether the limitation described in paragraph (1) has been satisfied shall be made, in accordance with regulations prescribed by the Secretary by adjusting such benefit so that it is equivalent to the benefit described in subparagraph (A). For purposes of this subparagraph, any ancillary benefit which is not directly related to retirement income benefits shall not be taken into account; and that portion of any joint and survivor annuity which constitutes a qualified joint and survivor annuity (as defined in section 417) shall not be taken into account. (C)Adjustment to $90,000 limit where benefit begins before the social security retirement age If the retirement income benefit under the plan begins before the social security retirement age, the determination as to whether the $90,000 limitation set forth in paragraph (1)(A) has been satisfied shall be made, in accordance with regulations prescribed by the Secretary, by reducing the limitation of paragraph (1)(A) so that such limitation (as so reduced) equals an annual benefit (beginning when such retirement income benefit begins) which is equivalent to a $90,000 annual benefit beginning at the social security retirement age. The reduction under this subparagraph shall be made in such manner as the Secretary may prescribe which is consistent with the reduction for old-age insurance benefits commencing before the social security retirement age under the Social Security Act. (D)Adjustment to $90,000 limit where benefit begins after the social security retirement age If the retirement income benefit under the plan begins after the social security retirement age, the determination as to whether the $90,000 limitation set forth in paragraph (1)(A) has been satisfied shall be made, in accordance with regulations prescribed by the Secretary, by increasing the limitation of paragraph (1)(A) so that such limitation (as so increased) equals an annual benefit (beginning when such retirement income benefit begins) which is equivalent to a $90,000 annual benefit beginning at the social security retirement age. (E)Limitation on certain assumptions (i)For purposes of adjusting any benefit or limitation under subparagraph (B) or (C), the interest rate assumption shall not be less than the greater of 5 percent or the rate specified in the plan. (ii)For purposes of adjusting any limitation under subparagraph (D), the interest rate assumption shall not be greater than the lesser of 5 percent or the rate specified in the plan. (iii)For purposes of this subsection, no adjustments under subsection (d)(1) shall be taken into account before the year for which such adjustment first takes effect. (F)Plans maintained by governments and tax-exempt organizations In the case of a governmental plan (within the meaning of section 414(d)), a plan maintained by an organization (other than a governmental unit) exempt from tax under this subtitle, or a qualified merchant marine plan - (i)subparagraph (C) shall be applied - (I)by substituting ''age 62'' for ''social security retirement age'' each place it appears, and (II)as if the last sentence thereof read as follows: ''The reduction under this subparagraph shall not reduce the limitation of paragraph (1)(A) below (i) $75,000 if the benefit begins at or after age 55, or (ii) if the benefit begins before age 55, the equivalent of the $75,000 limitation for age 55.'', and (ii)subparagraph (D) shall be applied by substituting ''age 65'' for ''social security retirement age'' each place it appears. For purposes of this subparagraph, the term ''qualified merchant marine plan'' means a plan in existence on January 1, 1986, the participants in which are merchant marine officers holding licenses issued by the Secretary of Transportation under title 46, United States Code. (G)Special limitation for qualified police or firefighters In the case of a qualified participant - (i)subparagraph (C) shall not reduce the limitation of paragraph (1)(A) to an amount less than $50,000, and (ii)the rules of subparagraph (F) shall apply. The Secretary shall adjust the $50,000 amount in clause (i) at the same time and in the same manner as under section 415(d). (H)Qualified participant defined For purposes of subparagraph (G), the term ''qualified participant'' means a participant - (i)in a defined benefit plan which is maintained by a State or political subdivision thereof, (ii)with respect to whom the period of service taken into account in determining the amount of the benefit under such defined benefit plan includes at least 15 years of service of the participant - (I)as a full-time employee of any police department or fire department which is organized and operated by the State or political subdivision maintaining such defined benefit plan to provide police protection, firefighting services, or emergency medical services for any area within the jurisdiction of such State or political subdivision, or (II)as a member of the Armed Forces of the United States. (3)Average compensation for high 3 years For purposes of paragraph (1), a participant's high 3 years shall be the period of consecutive calendar years (not more than 3) during which the participant both was an active participant in the plan and had the greatest aggregate compensation from the employer. In the case of an employee within the meaning of section 401(c)(1), the preceding sentence shall be applied by substituting for ''compensation from the employer'' the following: ''the participant's earned income (within the meaning of section 401(c)(2) but determined without regard to any exclusion under section 911)''. (4)Total annual benefits not in excess of $10,000 Notwithstanding the preceding provisions of this subsection, the benefits payable with respect to a participant under any defined benefit plan shall be deemed not to exceed the limitation of this subsection if - (A)the retirement benefits payable with respect to such participant under such plan and under all other defined benefit plans of the employer do not exceed $10,000 for the plan year, or for any prior plan year, and (B)the employer has not at any time maintained a defined contribution plan in which the participant participated. (5)Reduction for participation or service of less than 10 years (A)Dollar limitation In the case of an employee who has less than 10 years of participation in a defined benefit plan, the limitation referred to in paragraph (1)(A) shall be the limitation determined under such paragraph (without regard to this paragraph) multiplied by a fraction - (i)the numerator of which is the number of years (or part thereof) of participation in the defined benefit plan of the employer, and (ii)the denominator of which is 10. (B)Compensation and benefits limitations The provisions of subparagraph (A) shall apply to the limitations under paragraphs (1)(B) and (4) and subsection (e), except that such subparagraph shall be applied with respect to years of service with an employer rather than years of participation in a plan. (C)Limitation on reduction In no event shall subparagraph (A) or (B) reduce the limitations referred to in paragraphs (1) and (4) to an amount less than 1/10 of such limitation (determined without regard to this paragraph). (D)Application to changes in benefit structure To the extent provided in regulations, subparagraph (A) shall be applied separately with respect to each change in the benefit structure of a plan. (6)Computation of benefits and contributions The computation of - (A)benefits under a defined contribution plan, for purposes of section 401(a)(4), (B)contributions made on behalf of a participant in a defined benefit plan, for purposes of section 401(a)(4), and (C)contributions and benefits provided for a participant in a plan described in section 414(k), for purposes of this section shall not be made on a basis inconsistent with regulations prescribed by the Secretary. (7)Benefits under certain collectively bargained plans For a year, the limitation referred to in paragraph (1)(B) shall not apply to benefits with respect to a participant under a defined benefit plan - (A)which is maintained for such year pursuant to a collective bargaining agreement between employee representatives and one or more employers, (B)which, at all times during such year, has at least 100 participants, (C)under which benefits are determined solely by reference to length of service, the particular years during which service was rendered, age at retirement, and date of retirement, (D)which provides that an employee who has at least 4 years of service has a nonforfeitable right to 100 percent of his accrued benefit derived from employer contributions, and (E)which requires, as a condition of participation in the plan, that an employee complete a period of not more than 60 consecutive days of service with the employer or employers maintaining the plan. This paragraph shall not apply to a participant whose compensation for any 3 years during the 10-year period immediately preceding the year in which he separates from service exceeded the average compensation for such 3 years of all participants in such plan. This paragraph shall not apply to a participant for any period for which he is a participant under another plan to which this section applies which is maintained by an employer maintaining this plan. For any year for which the paragraph applies to benefits with respect to a participant, paragraph (1)(A) and subsection (d)(1)(A) shall be applied with respect to such participant by substituting the greater of $68,212 or one-half the amount otherwise applicable for such year under paragraph (1)(A) for ''$90,000''. (8)Social security retirement age defined For purposes of this subsection, the term ''social security retirement age'' means the age used as the retirement age under section 216(l) of the Social Security Act, except that such section shall be applied - (A)without regard to the age increase factor, and (B)as if the early retirement age under section 216(l)(2) of such Act were 62. (9)Special rule for commercial airline pilots (A)In general Except as provided in subparagraph (B), in the case of any participant who is a commercial airline pilot - (i)the rule of paragraph (2)(F)(i)(II) shall apply, and (ii)if, as of the time of the participant's retirement, regulations prescribed by the Federal Aviation Administration require an individual to separate from service as a commercial airline pilot after attaining any age occurring on or after age 60 and before the social security retirement age, paragraph (2)(C) (after application of clause (i)) shall be applied by substituting such age for the social security retirement age. (B)Individuals who separate from service before age 60 If a participant described in subparagraph (A) separates from service before age 60, the rules of paragraph (2)(F) shall apply. (10)Special rule for State and local government plans (A)Limitation to equal accrued benefit In the case of a plan maintained for its employees by any State or political subdivision thereof, or by any agency or instrumentality of the foregoing, the limitation with respect to a qualified participant under this subsection shall not be less than the accrued benefit of the participant under the plan (determined without regard to any amendment of the plan made after October 14, 1987). (B)Qualified participant For purposes of this paragraph, the term ''qualified participant'' means a participant who first became a participant in the plan maintained by the employer before January 1, 1990. (C)Election This paragraph shall not apply to any plan unless each employer maintaining the plan elects before the close of the 1st plan year beginning after December 31, 1989, to have this subsection (other than paragraph (2)(G)) applied without regard to paragraph (2)(F). (c)Limitation for defined contribution plans (1)In general Contributions and other additions with respect to a participant exceed the limitation of this subsection if, when expressed as an annual addition (within the meaning of paragraph (2)) to the participant's account, such annual addition is greater than the lesser of - (A)$30,000 (or, if greater, 1/4 of the dollar limitation in effect under subsection (b)(1)(A)), or (B)25 percent of the participant's compensation. (2)Annual addition For purposes of paragraph (1), the term ''annual addition'' means the sum of any year of - (A)employer contributions, (B)the employee contributions, and (C)forfeitures. For the purposes of this paragraph, employee contributions under subparagraph (B) are determined without regard to any rollover contributions (as defined in sections 402(c), 403(a)(4), 403(b)(8), and 408(d)(3)) without regard to employee contributions to a simplified employee pension which are excludable from gross income under section 408(k)(6). Subparagraph (B) of paragraph (1) shall not apply to any contribution for medical benefits (within the meaning of section 419A(f)(2)) after separation from service which is treated as an annual addition. (3)Participant's compensation For purposes of paragraph (1) - (A)In general The term ''participant's compensation'' means the compensation of the participant from the employer for the year. (B)Special rule for self-employed individuals In the case of an employee within the meaning of section 401(c)(1), subparagraph (A) shall be applied by substituting ''the participant's earned income (within the meaning of section 401(c)(2) but determined without regard to any exclusion under section 911)'' for ''compensation of the participant from the employer''. (C)Special rules for permanent and total disability In the case of a participant in any defined contribution plan - (i)who is permanently and totally disabled (as defined in section 22(e)(3)), (ii)who is not a highly compensated employee (within the meaning of section 414(q)), and (iii)with respect to whom the employer elects, at such time and in such manner as the Secretary may prescribe, to have this subparagraph apply, the term ''participant's compensation'' means the compensation the participant would have received for the year if the participant was paid at the rate of compensation paid immediately before becoming permanently and totally disabled. This subparagraph shall apply only if contributions made with respect to amounts treated as compensation under this subparagraph are nonforfeitable when made. (4)Special election for section 403(b) contracts purchased by educational organizations, hospitals,, (FOOTNOTE 1) home health service agencies, and certain churches, etc. (FOOTNOTE 1) So in original. (A)In the case of amounts contributed for an annuity contract described in section 403(b) for the year in which occurs a participant's separation from the service with an educational organization, a hospital, a home health service agency, a health and welfare service agency, or a church, convention or association of churches, or an organization described in section 414(e)(3)(B)(ii), at the election of the participant there is substituted for the amount specified in paragraph (1)(B) the amount of the exclusion allowance which would be determined under section 403(b)(2) (without regard to this section) for the participant's taxable year in which such separation occurs if the participant's years of service were computed only by taking into account his service for the employer (as determined for purposes of section 403(b)(2)) during the period of years (not exceeding ten) ending on the date of such separation. (B)In the case of amounts contributed for an annuity contract described in section 403(b) for any year in the case of a participant who is an employee of an educational organization, a hospital, a home health service agency, a health and welfare service agency, or a church, convention or association of churches, or an organization described in section 414(e)(3)(B)(ii), at the election of the participant there is substituted for the amount specified in paragraph (1)(B) the least of - (i)25 percent of the participant's includible compensation (as defined in section 403(b)(3)) plus $4,000, (ii)the amount of the exclusion allowance determined for the year under section 403(b)(2), or (iii)$15,000. (C)In the case of amounts contributed for an annuity contract described in section 403(b) for any year for a participant who is an employee of an educational organization, a hospital, a home health service agency, a health and welfare service agency, or a church, convention or association of churches, or an organization described in section 414(e)(3)(B)(ii), at the election of the participant the provisions of section 403(b)(2)(A) shall not apply. (D) (i)The provisions of this paragraph apply only if the participant elects its application at the time and in the manner provided under regulations prescribed by the Secretary. Not more than one election may be made under subparagraph (A) by any participant. A participant who elects to have the provisions of subparagraph (A), (B), or (C) of this paragraph apply to him may not elect to have any other subparagraph of this paragraph apply to him. Any election made under this paragraph is irrevocable. (ii)For purposes of this paragraph the term ''educational organization'' means an educational organization described in section 170(b)(1)(A)(ii). (iii)For purposes of this paragraph the term ''home health service agency'' means an organization described in subsection 501(c)(3) which is exempt from tax under section 501(a) and which has been determined by the Secretary of Health, Education, and Welfare to be a home health agency (as defined in section 1861(o) of the Social Security Act). (iv)For purposes of this paragraph, the terms ''church'' and ''convention or association of churches'' have the same meaning as when used in section 414(e). ((5) Repealed. Pub. L. 97-248, title II, Sec. 238(d)(5), Sept. 3, 1982, 96 Stat. 513) (6)Special rule for employee stock ownership plans If no more than one-third of the employer contributions to an employee stock ownership plan (as described in section 4975(e)(7)) for a year which are deductible under paragraph (9) of section 404(a) are allocated to highly compensated employees (within the meaning of section 414(q)), the limitations imposed by this section shall not apply to - (A)forfeitures of employer securities (within the meaning of section 409) under such an employee stock ownership plan if such securities were acquired with the proceeds of a loan (as described in section 404(a)(9)(A)), or (B)employer contributions to such an employee stock ownership plan which are deductible under section 404(a)(9)(B) and charged against the participant's account. (7)Certain contributions by church plans not treated as exceeding limits (A)Alternative exclusion allowance Any contribution or addition with respect to any participant, when expressed as an annual addition, which is allocable to the application of section 403(b)(2)(D) to such participant for such year, shall be treated as not exceeding the limitations of paragraph (1). (B)Contributions not in excess of $40,000 ($10,000 per year) (i)In general Notwithstanding any other provision of this subsection, at the election of a participant who is an employee of a church, a convention or association of churches, including an organization described in section 414(e)(3)(B)(ii), contributions and other additions for an annuity contract or retirement income account described in section 403(b) with respect to such participant, when expressed as an annual addition to such participant's account, shall be treated as not exceeding the limitation of paragraph (1) if such annual addition is not in excess of $10,000. (ii)$40,000 aggregate limitation The total amount of additions with respect to any participant which may be taken into account for purposes of this subparagraph for all years may not exceed $40,000. (iii)No election if paragraph (4)(A) election made No election may be made under this subparagraph for any year if an election is made under paragraph (4)(A) for such year. (C)Annual addition For purposes of this paragraph, the term ''annual addition'' has the meaning given such term by paragraph (2). (d)Cost-of-living adjustments (1)In general The Secretary shall adjust annually - (A)the $90,000 amount in subsection (b)(1)(A), and (B)in the case of a participant who is separated from service, the amount taken into account under subsection (b)(1)(B), for increases in the cost of living in accordance with regulations prescribed by the Secretary. Such regulations shall provide for adjustment procedures which are similar to the procedures used to adjust benefit amounts under section 215(i)(2)(A) of the Social Security Act. (2)Base periods The base period taken into account - (A)for purposes of subparagraph (A) of paragraph (1) is the calendar quarter beginning October 1, 1986, and (B)for purposes of subparagraph (B) of paragraph (1) is the last calendar quarter of the calendar year before the calendar year in which the participant is separated from service. (3)Freeze on adjustment to defined contribution and benefit limits The Secretary shall not make any adjustment under subparagraph (A) of paragraph (1) with respect to any year beginning after December 31, 1982, and before January 1, 1988. (e)Limitation in case of defined benefit plan and defined contribution plan for same employee (1)In general In any case in which an individual is a participant in both a defined benefit plan and a defined contribution plan maintained by the same employer, the sum of the defined benefit plan fraction and the defined contribution plan fraction for any year may not exceed 1.0. (2)Defined benefit plan fraction For purposes of this subsection, the defined benefit plan fraction for any year is a fraction - (A)the numerator of which is the projected annual benefit of the participant under the plan (determined as of the close of the year), and (B)the denominator of which is the lesser of - (i)the product of 1.25, multiplied by the dollar limitation in effect under subsection (b)(1)(A) for such year, or (ii)the product of - (I)1.4, multiplied by (II)the amount which may be taken into account under subsection (b)(1)(B) with respect to such individual under the plan for such year. (3)Defined contribution plan fraction For purposes of this subsection, the defined contribution plan fraction for any year is a fraction - (A)the numerator of which is the sum of the annual additions to the participant's account as of the close of the year, and (B)the denominator of which is the sum of the lesser of the following amounts determined for such year and for each prior year of service with the employer: (i)the product of 1.25, multiplied by the dollar limitation in effect under subsection (c)(1)(A) for such year (determined without regard to subsection (c)(6)), or (ii)the product of - (I)1.4, multiplied by - (II)the amount which may be taken into account under subsection (c)(1)(B) (or subsection (c)(7), if applicable) with respect to such individual under such plan for such year. (4)Special transition rules for defined contribution fraction In applying paragraph (3) with respect to years beginning before January 1, 1976 - (A)the aggregate amount taken into account under paragraph (3)(A) may not exceed the aggregate amount taken into account under paragraph (3)(B), and (B)the amount taken into account under subsection (c)(2)(B)(i) for any year concerned is an amount equal to - (i)the excess of the aggregate amount of employee contributions for all years beginning before January 1, 1976, during which the employee was an active participant of the plan, over 10 percent of the employee's aggregate compensation for all such years, multiplied by (ii)a fraction the numerator of which is 1 and the denominator of which is the number of years beginning before January 1, 1976, during which the employee was an active participant in the plan. Employee contributions made on or after October 2, 1973, shall be taken into account under subparagraph (B) of the preceding sentence only to the extent that the amount of such contributions does not exceed the maximum amount of contributions permissible under the plan as in effect on October 2, 1973. (5)Special rules for sections 403(b) and 408 For purposes of this section, any annuity contract described in section 403(b) (except in the case of a participant who has elected under subsection (c)(4)(D) to have the provisions of subsection (c)(4)(C) apply) for the benefit of a participant shall be treated as a defined contribution plan maintained by each employer with respect to which the participant has the control required under subsection (b) or (c) of section 414 (as modified by subsection (h)). For purposes of this section, any contribution by an employer to a simplified employee pension for an individual for a taxable year shall be treated as an employer contribution to a defined contribution plan for such individual for such year. In the case of any annuity contract described in section 403(b), the amount of the contribution disqualified by reason of subsection (g) shall reduce the exclusion allowance as provided in section 403(b)(2). (6)Special transition rule for defined contribution fraction for years ending after December 31, 1982 (A)In general At the election of the plan administrator, in applying paragraph (3) with respect to any year ending after December 31, 1982, the amount taken into account under paragraph (3)(B) with respect to each participant for all years ending before January 1, 1983, shall be an amount equal to the product of - (i)the amount determined under paragraph (3)(B) (as in effect for the year ending in 1982) for the year ending in 1982, multiplied by (ii)the transition fraction. (B)Transition fraction The term ''transition fraction'' means a fraction - (i)the numerator of which is the lesser of - (I)$51,875, or (II)1.4, multiplied by 25 percent of the compensation of the participant for the year ending in 1981, and (ii)the denominator of which is the lesser of - (I)$41,500, or (II)25 percent of the compensation of the participant for the year ending in 1981. (C)Plan must have been in existence on or before July 1, 1982 This paragraph shall apply only to plans which were in existence on or before July 1, 1982. (f)Combining of plans (1)In general For purposes of applying the limitations of subsections (b), (c), and (e) - (A)all defined benefit plans (whether or not terminated) of an employer are to be treated as one defined benefit plan, and (B)all defined contribution plans (whether or not terminated) of an employer are to be treated as one defined contribution plan. (2)Annual compensation taken into account for defined benefit plans If the employer has more than one defined benefit plan - (A)subsection (b)(1)(B) shall be applied separately with respect to each such plan, but (B)in applying subsection (b)(1)(B) to the aggregate of such defined benefit plans for purposes of this subsection, the high 3 years of compensation taken into account shall be the period of consecutive calendar years (not more than 3) during which the individual had the greatest aggregate compensation from the employer. (g)Aggregation of plans The Secretary, in applying the provisions of this section to benefits or contributions under more than one plan maintained by the same employer, and to any trusts, contracts, accounts, or bonds referred to in subsection (a)(2), with respect to which the participant has the control required under section 414(b) or (c), as modified by subsection (h), shall, under regulations prescribed by the Secretary, disqualify one or more trusts, plans, contracts, accounts, or bonds, or any combination thereof until such benefits or contributions do not exceed the limitations contained in this section. In addition to taking into account such other factors as may be necessary to carry out the purposes of subsections (e) and (f), the regulations prescribed under this paragraph shall provide that no plan which has been terminated shall be disqualified until all other trusts, plans, contracts, accounts, or bonds have been disqualified. (h)50 percent control For purposes of applying subsections (b) and (c) of section 414 to this section, the phrase ''more than 50 percent'' shall be substituted for the phrase ''at least 80 percent'' each place it appears in section 1563(a)(1). (i)Records not available for past periods Where for the period before January 1, 1976, or (if later) the first day of the first plan year of the plan, the records necessary for the application of this section are not available, the Secretary may by regulations prescribe alternate methods for determining the amounts to be taken into account for such period. (j)Regulations; definition of year The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section, including, but not limited to, regulations defining the term ''year'' for purposes of any provision of this section. (k)Special rules (1)Defined benefit plan and defined contribution plan For purposes of this title, the term ''defined contribution plan'' or ''defined benefit plan'' means a defined contribution plan (within the meaning of section 414(i)) or a defined benefit plan (within the meaning of section 414(j)), whichever applies, which is - (A)a plan described in section 401(a) which includes a trust which is exempt from tax under section 501(a), (B)an annuity plan described in section 403(a), (C)an annuity contract described in section 403(b), (D)an individual retirement account described in section 408(a), (E)an individual retirement annuity described in section 408(b), or (F)a simplified employee pension. (2)Contributions to provide cost-of-living protection under defined benefit plans (A)In general In the case of a defined benefit plan which maintains a qualified cost-of-living arrangement - (i)any contribution made directly by an employee under such arrangement - (I)shall not be treated as an annual addition for purposes of subsection (c), but (II)shall be so treated for purposes of subsection (e), and (ii)any benefit under such arrangement which is allocable to an employer contribution which was transferred from a defined contribution plan and to which the requirements of subsection (c) were applied shall, for purposes of subsection (b), be treated as a benefit derived from an employee contribution (and subsections (c) and (e) shall not again apply to such contribution by reason of such transfer). (B)Qualified cost-of-living arrangement defined For purposes of this paragraph, the term ''qualified cost-of-living arrangement'' means an arrangement under a defined benefit plan which - (i)provides a cost-of-living adjustment to a benefit provided under such plan or a separate plan subject to the requirements of section 412, and (ii)meets the requirements of subparagraphs (C), (D), (E), and (F) and such other requirements as the Secretary may prescribe. (C)Determination of amount of benefit An arrangement meets the requirement of this subparagraph only if the cost-of-living adjustment of participants is based - (i)on increases in the cost-of-living after the annuity starting date, and (ii)on average cost-of-living increases determined by reference to 1 or more indexes prescribed by the Secretary, except that the arrangement may provide that the increase for any year will not be less than 3 percent of the retirement benefit (determined without regard to such increase). (D)Arrangement elective; time for election An arrangement meets the requirements of this subparagraph only if it is elective, it is available under the same terms to all participants, and it provides that such election may at least be made in the year in which the participant - (i)attains the earliest retirement age under the defined benefit plan (determined without regard to any requirement of separation from service), or (ii)separates from service. (E)Nondiscrimination requirements An arrangement shall not meet the requirements of this subparagraph if the Secretary finds that a pattern of discrimination exists with respect to participation. (F)Special rules for key employees (i)In general An arrangement shall not meet the requirements of this paragraph if any key employee is eligible to participate. (ii)Key employee For purposes of this subparagraph, the term ''key employee'' has the meaning given such term by section 416(i)(1), except that in the case of a plan other than a top-heavy plan (within the meaning of section 416(g)), such term shall not include an individual who is a key employee solely by reason of section 416(i)(1)(A)(i). (l)Treatment of certain medical benefits (1)In general For purposes of this section, contributions allocated to any individual medical account which is part of a pension or annuity plan shall be treated as an annual addition to a defined contribution plan for purposes of subsection (c). Subparagraph (B) of subsection (c)(1) shall not apply to any amount treated as an annual addition under the preceding sentence. (2)Individual medical benefit account For purposes of paragraph (1), the term ''individual medical benefit account'' means any separate account - (A)which is established for a participant under a pension or annuity plan, and (B)from which benefits described in section 401(h) are payable solely to such participant, his spouse, or his dependents.
403 (B) 2 (2)Exclusion allowance (A)In general For purposes of this subsection, the exclusion allowance for any employee for the taxable year is an amount equal to the excess, if any, of - (i)the amount determined by multiplying 20 percent of his includible compensation by the number of years of service, over (ii)the aggregate of the amounts contributed by the employer for annuity contracts and excludible from the gross income of the employee for any prior taxable year. (B)Election to have allowance determined under section 415 rules In the case of an employee who makes an election under section 415(c)(4)(D) to have the provisions of section 415(c)(4)(C) (relating to special rule for section 403(b) contracts purchased by educational institutions, hospitals, home health service agencies, and certain churches, etc.) apply, the exclusion allowance for any such employee for the taxable year is the amount which could be contributed (under section 415 without regard to section 415(c)(8)) by his employer under a plan described in section 403(a) if the annuity contract for the benefit of such employee were treated as a defined contribution plan maintained by the employer. (C)Number of years of service for duly ordained, commissioned, or licensed ministers or lay employees For purposes of this subsection and section 415(c)(4)(A) - (i)all years of service by - (I)a duly ordained, commissioned, or licensed minister of a church, or (II)a lay person, as an employee of a church, a convention or association of churches, including an organization described in section 414(e)(3)(B)(ii), shall be considered as years of service for 1 employer, and (ii)all amounts contributed for annuity contracts by each such church (or convention or association of churches) or such organization during such years for such minister or lay person shall be considered to have been contributed by 1 employer. For purposes of the preceding sentence, the terms ''church'' and ''convention or association of churches'' have the same meaning as when used in section 414(e).
402 G LIMIT
g)Limitation on exclusion for elective deferrals (1)In general Notwithstanding subsections (e)(3) and (h)(1)(B), the elective deferrals of any individual for any taxable year shall be included in such individual's gross income to the extent the amount of such deferrals for the taxable year exceeds $7,000. (2)Distribution of excess deferrals (A)In general If any amount (hereinafter in this paragraph referred to as ''excess deferrals'') is included in the gross income of an individual under paragraph (1) for any taxable year - (i)not later than the 1st March 1 following the close of the taxable year, the individual may allocate the amount of such excess deferrals among the plans under which the deferrals were made and may notify each such plan of the portion allocated to it, and (ii)not later than the 1st April 15 following the close of the taxable year, each such plan may distribute to the individual the amount allocated to it under clause (i) (and any income allocable to such amount). The distribution described in clause (ii) may be made notwithstanding any other provision of law. (B)Treatment of distribution under section 401(k) Except to the extent provided under rules prescribed by the Secretary, notwithstanding the distribution of any portion of an excess deferral from a plan under subparagraph (A)(ii), such portion shall, for purposes of applying section 401(k)(3)(A)(ii), be treated as an employer contribution. (C)Taxation of distribution In the case of a distribution to which subparagraph (A) applies - (i)except as provided in clause (ii), such distribution shall not be included in gross income, and (ii)any income on the excess deferral shall, for purposes of this chapter, be treated as earned and received in the taxable year in which such income is distributed. No tax shall be imposed under section 72(t) on any distribution described in the preceding sentence. (D)Partial distributions If a plan distributes only a portion of any excess deferral and income allocable thereto, such portion shall be treated as having been distributed ratably from the excess deferral and the income. (3)Elective deferrals For purposes of this subsection, the term ''elective deferrals'' means, with respect to any taxable year, the sum of - (A)any employer contribution under a qualified cash or deferred arrangement (as defined in section 401(k)) to the extent not includible in gross income for the taxable year under subsection (a)(8) (FOOTNOTE 1) (determined without regard to this subsection), (FOOTNOTE 1) See References in Text note below. (B)any employer contribution to the extent not includible in gross income for the taxable year under subsection (h)(1)(B) (determined without regard to this subsection), and (C)any employer contribution to purchase an annuity contract under section 403(b) under a salary reduction agreement (within the meaning of section 3121(a)(5)(D)). An employer contribution shall not be treated as an elective deferral described in subparagraph (C) if under the salary reduction agreement such contribution is made pursuant to a one-time irrevocable election made by the employee at the time of initial eligibility to participate in the agreement or is made pursuant to a similar arrangement involving a one-time irrevocable election specified in regulations. (4)Increase in limit for amounts contributed under section 403(b) contracts The limitation under paragraph (1) shall be increased (but not to an amount in excess of $9,500) by the amount of any employer contributions for the taxable year described in paragraph (3)(C). (5)Cost-of-living adjustment The Secretary shall adjust the $7,000 amount under paragraph (1)at the same time and in the same manner as under section 415(d). (6)Disregard of community property laws This subsection shall be applied without regard to community property laws. (7)Coordination with section 72 For purposes of applying section 72, any amount includible in gross income for any taxable year under this subsection but which is not distributed from the plan during such taxable year shall not be treated as investment in the contract. (8)Special rule for certain organizations (A)In general In the case of a qualified employee of a qualified organization, with respect to employer contributions described in paragraph (3)(C) made by such organization, the limitation of paragraph (1) for any taxable year shall be increased by whichever of the following is the least: (i)$3,000, (ii)$15,000 reduced by amounts not included in gross income for prior taxable years by reason of this paragraph, or (iii)the excess of $5,000 multiplied by the number of years of service of the employee with the qualified organization over the employer contributions described in paragraph (3) made by the organization on behalf of such employee for prior taxable years (determined in the manner prescribed by the Secretary). (B)Qualified organization For purposes of this paragraph, the term ''qualified organization'' means any educational organization, hospital, home health service agency, health and welfare service agency, church, or convention or association of churches. Such term includes any organization described in section 414(e)(3)(B)(ii). Terms used in this subparagraph shall have the same meaning as when used in section 415(c)(4). (C)Qualified employee For purposes of this paragraph, the term ''qualified employee'' means any employee who has completed 15 years of service with the qualified organization. (D)Years of service For purposes of this paragraph, the term ''years of service'' has the meaning given such term by section 403(b).
402F
(f)Written explanation to recipients of distributions eligible for rollover treatment (1)In general The plan administrator of any plan shall, within a reasonable period of time before making an eligible rollover distribution from an eligible retirement plan, provide a written explanation to the recipient - (A)of the provisions under which the recipient may have the distribution directly transferred to another eligible retirement plan, (B)of the provision which requires the withholding of tax on the distribution if it is not directly transferred to another eligible retirement plan, (C)of the provisions under which the distribution will not be subject to tax if transferred to an eligible retirement plan within 60 days after the date on which the recipient received the distribution, and (D)if applicable, of the provisions of subsections (d) and (e) of this section. (2)Definitions For purposes of this subsection - (A)Eligible rollover distribution The term ''eligible rollover distribution'' has the same meaning as when used in subsection (c) of this section or paragraph (4) of section 403(a). (B)Eligible retirement plan The term ''eligible retirement plan'' has the meaning given such term by subsection (c)(8)(B).
3 PAGE GUIDE FOR HELP WITH MAXIMUM EXCLUSION ALLOWANCE CALCULATIONS
