Most Recent Year of Service

Q. What is the most recent year of service?

A. The most recent year of service is the last full year of service, ending on the last day of the tax year that an employee worked for the employer that maintained a 403(b) account.

If an employee’s tax year isn’t the same as the employer’s annual work period, the employee’s most recent year of service is made up of parts of at least two of the employer’s annual work periods.

Example. A professor who reports her income on a calendar-year basis is employed on a full-time basis by a university that operates on an academic year (October of one year through May of the next). To figure her includible compensation, the professor's most recent year of service is her service from January through May and from October through December.