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March 26, 2021

Elective Deferral Contribution

Your Guide

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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 from 2014 are as follows:

401(k) and  403(b)

Year

Salary deferral/Reduction limit  

Catch-up contribution limit

2014

$17,500

$5,500

2015

$18,000

$6,000

2016

$18,000

$6,000

2017

$18,000

$6,000

2018

$18,500

$6,000

2019

$19,000

$6,000

2020

$19,500

$6,500

2021

$19,500

$6,500

Year

SIMPLE IRA and SIMPLE 401(k)

Salary Deferral contribution  limit Catch-up contribution limit
2014

$12,000

$5,500

2015

$12,500

$6,000

2016

$12,500

$6,000

2017

$12,500

$6,000

2018

$12,500

$6,000

2019

$13,000

$6,000

2020

$13,500

$6,500

2021

$13,500

$6,500

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 2009 is $16,500, plus an additional $5,500 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 $16,500 + catch-up  to the 457(b) plan, plus an additional $16,500 + catch-up to the 401(k)/403(b) plan.

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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