How Much Can I Contribute Annually to a 403B?

Make every penny count in your 403(b).

If you work for a public or nonprofit employer, you might have access to a 403(b) plan. This 403(b) plan allows you to put money aside for retirement on a tax-deferred basis. The money you invest into a 403(b) plan lowers your taxable income, and that in turn means you pay less in current taxes while saving for retirement. The Internal Revenue Service provides generous contribution limits for 403(b) plans, but it limits the amount workers can put away.

Employer Limits

Some employers limit the percentage of income their workers can contribute to the company's 403(b) plan. That means that the amount you can contribute to the plan might be less than the limits set by the IRS. For instance, if your salary is $30,000 per year and your employer limits employee contributions to 30 percent of your salary, the most you could put aside is $9,000.

Regular Contribution Limit

The contribution limits for 403(b) plans change from time to time, and it is always a good idea to check those limits before planning your contribution strategy for the coming year. For the year 2010, workers can contribute up to $16,500 to their plans if they are 49 and younger. Workers 50 years of age and older can contribute extra money under the catch-up provision.

Catch-Up Contributions

Older workers with few financial assets are at particular risk of a poor retirement, so the IRS has established the catch-up provision to allow workers 50 and older to put aside extra money for their golden years. For 2010 those older workers can put aside an extra $5,500 in their 403(b) plans, for a total contribution limit of $22,000.

Multiple Jobs

If you work at more than one job and both jobs offer a 403(b) plan, the total of the contributions from all those jobs cannot exceed the current limit set by the IRS. For instance, if in 2010 you worked for one employer and contributed $9,000 to your 403(b) and then changed jobs, the most you could contribute at your new job would be $7,500, assuming you are 49 or younger and not eligible for the catch-up contribution. You will need to keep track of your contributions for each plan, since the different administrators have no way of knowing how much you have already contributed to another employer's 403(b) plan.

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