Elective Deferral Contribution
Definition
Elective contributions made to SIMPLE IRAs, 401(k) plans, SARSEPs, 403(b) plans . A participant may defer up to 100% of his/her salary/wages to the plan, up to the statutory dollar limit in effect for the year. For qualified plans and 403(b) plans, the employer may limit salary reduction contributions to a percentage less than 100% of salary/wages, if permitted. Different limit applies to different types of plans.
The dollar limits for 2002 to 2007 are as follows:
401(k) and 403(b) |
Year |
Salary deferral/Reduction limit |
Catch-up contribution limit |
2002 |
$11,000 |
$1,000 |
2003 |
$12,000 |
$2,000 |
2004 |
$13,000 |
$3,000 |
2005 |
$14,000 |
$4,000 |
2006 |
$15,000 |
$5,000 |
2007 |
$15,500 |
$5,000 |
|
Year |
SIMPLE IRA and SIMPLE 401(k) |
Salary Deferral contribution limit |
Catch-up contribution limit |
2002 |
$7,000 |
$500 |
2003 |
$8,000 |
$1,000 |
2004 |
$9,000 |
$1,500 |
2005 |
$10,000 |
$2,000 |
2006 |
$10,000 |
$2,500 |
2007 |
$10,500 |
$2,500 |
|
Referring Cite
IRC §402(g), Treas. Reg. § 1.402(g)-1(b); Prop. Treas. Reg. § 1.402(g)-1(b)(5) and (6)
Additional Helpful Information
- Salary reduction contributions made to a Section 457 plan are not treated as an elective deferral contribution
- If an individual participates in multiple employer sponsored plans with salary reduction feature, the aggregate salary deferral contribution cannot exceed the dollar limit in effect for the year. For instance, if an individual participates in a 403(b) plan, a 401(k) plan and a SIMPLE IRA, the maximum salary deferral that the individual can contribute for 2007 is $15,500, plus an additional $5,000 if the individual is at least age 50 by year-end. This does not include salary reduction contributions to 457(b) plans, as those contributions are not salary deferral contributions. Therefore, an individual who participates in a 457(b) plan and a 401(k)/403(b) plan can contribute $15,500 + catch-up to the 457(b) plan, plus an additional $15,500 + catch-up to the 401(k)/403(b) plan.
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