Q. How does one figure the maximum amount that can be contributed to a 403(B) plan?
A. Generally, contributions to a 403(b) account are limited to the lesser of:
- The limit on annual additions, or
- The limit on elective deferrals.
Depending upon the type of contributions made to a 403(b) account, only one of the limits may apply to it. Whether or both of the limits must be applied depends on the type of contributions made to the 403(b) account during the year.
If the only contributions made to a 403(b) account during the year were elective deferrals made under a salary reduction agreement, both of the limits will need to be figured. The maximum amount that can be contributed is the lesser of the two limits.
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