Terms of Use

What is a 403(b)?

A 403(b) is an employer sponsored retirement savings plan that allows you to save pre-tax dollars for your retirement.

A Roth 403(b) permits only after-tax contributions but allows you to diversify your tax risk by letting eligible participants make tax-free withdrawals after retirement.

The IRS limits the amount you can contribute each year

  • In 2017, you can contribute up to $18,000.  This limit is applicable if you're under age 50 as of December 31st (referred to as the "elective deferral amount").  In 2018, you can contribute up to $18,500.

  • In 2017 and 2018, if you are 50 or older any time during the calendar year you can contribute an additional $6,000.  That means you can contribute up to $24,000 in 2017 and $24,500 in 2018 if you're age 50 or older (referred to as "catch-up contributions")*

  • Up to 100% of your includable compensation** (if less than the elective deferral limit)

*An additional catch-up may be available if you are an eligible employee and have at least 15 years of service. The actual amounts may vary based on your employers specific plan design.

**Includable compensation is your gross compensation less any pre-tax deductions.

A plan that includes both employer contributions and employee elective deferrals is subject to both the elective deferral limit, and the limit on annual additions. For those with employer matches or other employer contributions, the limit of total employer and employee contributions is $54,000 in 2017 ($55,000 in 2018) or 100% of compensation (whichever is less) plus any catch-up contributions if you are over age 50.

15-Year Rule

Employees with 15 years of service with their current employer and an annual average contribution of less than $5,000 per year are eligible for an additional $3,000 contribution per year up to a lifetime maximum catch up of $21,000. This is known as the 15-year rule.

For participants eligible for both the age 50 catch-up and the 15-year rule, the IRS will apply contributions above the regular limit first to the 15-year rule. Employers are not required to make this provision available.

Defined Contribution Plan Limits
For 401(k), 403(b) and most 457 plans
2017 2018
Maximum employee elective deferral limit $ 18,000 $ 18,500
Employee catch-up contribution (ages 50 and older) $   6,000 $  6,000
Defined contribution maximum limit, all sources $ 54,000 $ 55,000
Defined contribution maximum limit (ages 50 and older) $ 60,000 $ 61,000
Employee compensation limit for calculating contributions $270,000 $275,000