The maximum amount you can contribute to a 403(b) plan depends on your age and years of service. These are the correct 403(b) plan contribution limits for 2009 and 2010. This limit can be split between multiple qualified retirement plans (401(k), 403(b), SIMPLE, or SEP), but the combined total of your contributions cannot exceed this limit. You cannot contribute more than 100% of your compensation.
- Under age 49 at the end of the year: $16,500
- Age 50 or older by the end of the year: $22,000
15 Year Rule
If you have 15 years of service with a qualified organization, you may be eligible to contribute up to an additional $3,000 per year to your 403(b) plan. However, the rules for this can get tricky, so you should speak with the human resources department at work and read the IRS explanation of the 15 year rule.
Deadline for Contributions
Elective contributions are generally made from your paycheck, so you need to have your contributions set up within the year. You can choose to contribute everything at the beginning of the year if your plan allows it, or you can just contribute a certain amount or percentage from each paycheck.
Tax Deduction for Contributions
Your contributions to a 403(b) plan reduce your taxable income, so you do not need to claim a tax deduction on your return. However, you may be eligible for the Retirement Savings Contribution Credit.