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 from 2002 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

2008

$15,500

$5,000

2009

$16,500

$5,500

 

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

2008

$10,500

$2,500

2009

$11,500

$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 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.