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Practice Management

What Happens When a 403(b) Doesn’t Limit Contributions to Not Exceed Section 415(c) Limits?

If a 403(b) plan fails to limit employer and employee contributions so they do not exceed Internal Revenue Code Section 415(c) limits, the IRS says that an organization should:

  • Determine types of contributions allowed in the plan and total employee and employer contributions per participant.
  • Compare those contributions to the current year’s dollar limit.
  • Transfer excess contributions to a separate 403(b) account or distribute them to the affected participants.