April 22, 2021

Salary Deferral Contribution

Your Guide

Definition

A contribution made pursuant to a participant’s election to have a portion of his/her salary/wages  contributed to his/ her employer sponsored plan  rather than have the amount paid directly to him/her in cash. A participant may elect to 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 are as follows:

401(k), 403(b) and 457(b)

Year

Salary deferral/Reduction limit  

Catch-up contribution limit

2007

$15,500

$5,000

2008

$15,500

$5,000

2009

$16,500

$5,500

2010

$16,500

$5,500

2011

$16,500

$5,500

2012

$17,000

$5,500

2013

$17,500

$5,500

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

2007

$10,500

$500

2008

$10,500

$1,000

2009

$11,500

$1,500

2010

$11,500

$2,000

2011

$11,500

$2,500

2012

$11,500

$2,500

2013

$12,000

$2,500

2014

$12,000

$2,500

2015

$12,500

$3,000

2016

$12,500

$3,000

2017

$12,500

$3,000

2018

$12,500

 $3,000

2019

$13,000

 $3,000

2020$13,500$3,000
2021$13,500$3,000

Referring Cite

IRC § 403(b), IRC § 401(k), IRC § 457(b), IRC § 408(k), IRC § 408(p), IRC §402(g)

Additional Helpful Information

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.

This does not include salary reduction contributions to 457(b) plans, as those contributions are not salary deferral contributions.

Written By

Retirement Dictionary Staff

Frequently Asked Questions Regarding

72(t) payments – also referred to as Substantially Equal Periodic Payments (SEPP) can be taken from IRAs, qualified plans-including 401(k) plans, and 403(b) accounts. However, while 72(t) payments can be taken from IRAs at any time, they can be taken from qualified plans and 403(b) accounts only after the participant has separated from service with the employer that sponsored the plan. Therefore, if you are still employed by the company that sponsored your 401(k) plan, you cannot take 72(t) payments from that account.  But, if you are no longer employed by that company, then you may be able to take 72(t) payments from the account.

Please contact our office to help you determine if a 72(t) payment program is suitable for you.

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