Figuring the Limit on Elective Deferrals

Worksheet F in chapter 13 can be used to figure the limit on elective deferrals.

Example

Based on the rules in chapters 3 and 4, Jerry has figured his MEA and his limit on annual additions. The last component needed before he can determine his MAC for 2001 is the limit on elective deferrals.

Figuring Jerry's limit on elective deferrals. Jerry 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 is $10,500, as shown in Table 5-1.

Figuring Jerry's MAC

Jerry has determined his MEA to be $24,820. His limit on annual additions is $9,450 and his limit on elective deferrals is $10,500. Based on this, the maximum amount that could have been contributed to a 403(b) account on Jerry's behalf in 2001 is $9,450, the least of the three limits.

All three components are pulled together in Table 5-2.

Table 5-2. Worksheet 1. Maximum Amount Contributable for 2001

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