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Benefits
Contribution Limits (457(b) Deferred Compensation Plan)
|
Year |
Annual 457(b) Contribution Limits |
|
2005 |
$14,000 |
|
2006 |
$15,000 |
|
2007 |
$15,500 |
|
2008 |
$15,500 | |
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Cost of living adjustments (COLAs) may allow for additional increases to these limits in increments of $500 per year. |
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|
Year |
Annual
457(b) Contribution Limits |
Additional
Catch up Limit |
Total
457(b) Contribution Limit |
|
2005 |
$14,000 |
$4,000 |
$18,000 |
|
2006 |
$15,000 |
$5,000 |
$20,000 |
|
2007 |
$15,500 |
$5,000 |
$20,500 |
|
2008 |
$15,500 |
$5,000 |
$20,500 | |
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After 2007, cost of living adjustments (COLAs) may allow for additional increases to these limits in increments of $500 per year. |
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Another catch-up limit allows participants who are within three years of attaining their normal retirement age to contribute up to twice the “annual contribution limit", provided your plan permits employees to take advantage of this limit. For these participants, the maximum amount allowed is actually the lesser of:
- twice the annual limit, or
- the annual limit, plus the total amount of underutilized contributions from prior years.
Participants who use this catch-up limit cannot also use the “age 50” catch-up limit in the same year.
EXAMPLE: Let’s assume it is 2008, Jane is 62 years old, and she is within three years of her normal retirement age. Let’s also assume that she contributed $6,000 in 2005, $7,000 in 2006 and $8,000 in 2007, for a total of $21,000. However, she could have contributed $44,500 in those three years ($14,000 + $15,000 + $15,500), or an extra $23,500. Because Jane is within three years of her normal retirement age, she can contribute the lesser of:
- $31,000 (twice the annual 2008 limit of $15,500); or
- $39,000 (the 2008 limit of $15,500, plus the $23,500 “left over” amount from the three previous years).
In this example, Jane would be allowed to contribute $31,000 in 2008. |
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