Figuring the Limit on Elective Deferrals
You can use Part II of Worksheet 1 in chapter 9 to figure the limit on
elective deferrals.
Example
Floyd has figured his limit on annual additions. The only other component needed before
he can determine his MAC for 2003 is his limit on elective deferrals.
Figuring Floyd's limit on elective deferrals. Floyd has been
employed with his current employer for less than 15 years. He is not eligible for the
special 15-year increase. Therefore, his limit on elective deferrals for 2003 is $12,000,
as shown in Table 4-2.
Floyd's employer will not make any nonelective contributions to his 403(b) account and
Floyd will not make any after-tax contributions.
Figuring Floyd's MAC
Floyd has determined that his limit on annual additions for 2003 is $40,000 and his
limit on elective deferrals is $12,000. Because elective deferrals are the only
contributions made to Floyd's account, the maximum amount that can be contributed to a
403(b) account on Floyd's behalf in 2003 is $12,000, the lesser of both limits.
Note. Use this worksheet to figure your MAC
Table 4-2. Worksheet 1. Maximum Amount Contributable (MAC)
| Part I. Limit on Annual Additions |
|
|
| 1. |
Enter your includible compensation for your most recent year of service |
1. |
$70,475 |
| 2. |
Maximum |
2. |
$40,000 |
| 3. |
Enter the lesser of line 1 or line 2. This is your limit on annual additions |
3. |
$40,000 |
| |
Caution: If you had only nonelective contributions, skip Part II and enter the
amount from line 3 on line 16. |
|
|
| Part II. Limit on Elective Deferrals |
|
|
| 4. |
Maximum contribution
- For 2002, enter $11,000
- For 2003, enter $12,000
|
4. |
$12,000 |
| |
Note. If you have at least 15 years of service with a qualifying organization,
complete lines 5 through 15. If not, enter zero (-0-) on line 14 and go to line 15. |
|
|
| 5. |
Amount per year of service |
5. |
$ 5,000 |
| 6. |
Enter your years of service |
6. |
|
| 7. |
Multiply line 5 by line 6 |
7. |
|
| 8. |
Enter the total of all elective deferrals for prior years made for you by qualifying
organizations |
8. |
|
| 9. |
Subtract line 8 from line 7. If zero or less, enter zero (-0-) |
9. |
|
| 10. |
Maximum increase in limit for long service |
10. |
$15,000 |
| 11. |
Enter all prior year increases in the limit for long service |
11. |
|
| 12. |
Subtract line 11 from line 10 |
12. |
|
| 13. |
Maximum additional contributions |
13. |
$ 3,000 |
| 14. |
Enter the least of lines 9, 12, or 13. This is your increase in the limit for long
service |
14. |
-0- |
| 15. |
Add lines 4 and 14. This is your limit on elective deferrals |
15. |
$12,000 |
| |
Part III. Maximum Amount Contributable |
|
|
| 16. |
- If you had only nonelective contributions, enter the amount from line 3.
This is your MAC.
- If you had only elective deferrals, enter the lesser of lines 3 or 15.
This is your MAC.
- If you had both elective deferrals and nonelective contributions, enter
the amount from line 3. This is your MAC. (Use the amount on line 15 to determine
if you have excess elective deferrals as explained in chapter 7.)
|
16. |
$12,000 |
- Continue - |
