How To Elect an Alternative Limit

You make the election to use an alternative limit on annual additions by figuring your tax using that limit. The election is considered made only if use of the alternative limit is needed to support the exclusion from income shown on your income tax return.

Election is irrevocable. If you elect to use an alternative limit, you cannot change the election.

One election allowed. If you elect one of the alternative limits, you cannot elect to have any of the other alternative limits apply for 2001 for any 403(b) contract purchased for you by the employer.

If in a previous year, you have elected either the any year limit or the overall limit, that limit is the only alternative limit you can use in 2001 to figure your limit on annual additions.

Example. Janice is employed as a teacher. In 1999, she used the any year limit. In 2000 and 2001, if Janice is working for the same employer, she can use only the general rule or the any year limit on annual additions.

Amending a return to take advantage of an alternative limit. You can amend an earlier year's tax return to elect an alternative limit on annual additions.

Generally, you must file an amended return by the later of the following.

• 3 years from the date you filed your original return for the year.
• 2 years from the time you paid your tax for that year.

A return filed early is considered filed on the due date.

If you amend an earlier year's return to elect an alternative limit and use of that limit increases your tax for that year, any additional tax due to the use of the alternative limit is not treated as an underpayment of tax for the penalty for failure to pay estimated income tax.

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