403(b) Contribution Limits

The maximum amount a person can contribute to his or her is set each year by the IRS after taking inflation into account. For the year 2011, people can contribute up to $16,500 as an elective deferral to their employer's 403(b) plan. Additionally, if you are age 50 or older, you can contribute an additional catch-up contribution of $5,500.

403(b) Contribution Limits by Year

• For 2011: $16,500 ($22,000 if age 50 or older)
• For 2010: $16,500 ($22,000 if age 50 or older)
• For 2009: $16,500 ($22,000 if age 50 or older)

The 403(b) limit applies to all 403(b) accounts you might have for the current year. If you work at two or more jobs or switch jobs in the middle of the year, then you may need to track your 403(b) contributions yourself to ensure that you don't contribute over the limit.

For people who plan to contribute the maximum allowed, it may be easiest to break the annual limit into equal dollar amounts per pay period. That way, you'll be saving the same amount each pay period and will be dollar-cost-averaging into your retirement investments. The annual 403(b) maximum limit per pay period amounts to:

• 26 pay periods (paid every two weeks): $634.61 (or $846.15 with catch-up contributions)
• 24 pay periods (paid twice a month): $687.50 (or $916.66 with catch-up contributions)
• 12 pay periods (paid once a month): $1,375 (or $1,833.33 with catch-up contributions)

Elective deferrals are treated separately from the employer's matching contributions. Elective salary deferrals can be placed into a tax-deferred traditional 403(b) or into a post-tax Roth 403(b) account, or a combination of traditional and Roth as long as the total of all salary deferrals are equal to or less than the annual maximum. Matching contributions from the employer are limited to 25% of your salary. Matching funds are always contributed to the tax-deferred portion of your 403(b) plan. The total of your elective salary deferral plus employer matching contributions is limited to $49,000 for 2011.