403(b) Plan Contribution Limits—Historical Chart
Save up to $19,000 a year through a 403(b) plan in 2019
A 403(b) retirement plan is a thrift savings plan or tax-sheltered annuity plan offered by some charities and most public schools. They are similar to a 401(k) in terms of contributions and employer matching, as well as sharing elective deferral limits (how much an employee can have their employer deduct from their pay and redirect it into their plan).
The most a taxpayer can contribute as an elective deferral to a 403(b) plan is $19,500 as of 2020. If you are age 50 or older, you can contribute an additional $6,500 for 2020 as a "catch-up" contribution. Employers can match an employee's contribution for the year.
The total of elective deferrals and matching contributions is limited to $57,000 for the 2020 tax year. These limits are indexed for inflation, which means they can be expected to increase periodically to keep up with the economy.
Historical Limit Increases
This chart can help put it all in historical perspective. You'll see that limits have not increased significantly since 2009, but they've crept up incrementally to match inflation and the economy, at least to some extent.
|403(b) Contribution Limits by Year|
|Year||Elective Salary Deferral Limit||Catch-up contributions if age 50 or older||Total Possible Employee Contribution Limit||Limit on All Sources||Source|
The elective salary deferral limit increased to $19,500 for 2020. The catch-up limit for employees increased to $6,500 in 2020, up from $6,000 for 2015 through 2019. The total maximum contribution for employees at least 50 years old has increased to $26,000.
Limits Apply to Two Plans
These limits apply to any 403(b) and 401(k) accounts a taxpayer might have during the year. In other words, if you have two or more jobs or switch jobs in the middle of the year, you may have to devote some time to track your contributions to your 401(k) and 403(b) plans to make sure that you do not contribute more than the amount allowed, as this can result in significant annual penalties.
Some Tips for Breaking Down the Limit
It might be easiest to break the annual limit into equal dollar amounts per pay period if you plan to contribute the maximum amount allowed. This will allow you to save the same amount each pay period and it will dollar-cost-average your contributions into your retirement investments. You can do this by taking your annual contribution amount and dividing that total by the number of pay periods during the year.
Elective deferrals are treated separately from the employer's matching contributions. Each has its own limits and tax treatment. Elective salary deferrals can be placed into a tax-deferred traditional 403(b) or into a post-tax Roth 403(b) account, or a combination of traditional and Roth accounts as long as the total of all salary deferrals equals less than the annual maximum.
Matching funds are always contributed to the tax-deferred portion of your 403(b) plan. The total of your elective salary deferral plus employer matching contributions is limited to $57,000 for 2020. This amount increased $1,000 from the $56,000 limit that applied in 2019.
IRS. “Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans),” Pages 2-4, 12. Accessed Aug. 19, 2020.
IRS. “Retirement Topics - 403(b) Contribution Limits.” Accessed Aug. 19, 2020.
IRS. “Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans),” Pages 3-4. Accessed Aug. 19, 2020.
IRS. “Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans),” Page 8. Accessed Aug. 19, 2020.
IRS. “Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans),” Page 3. Accessed Aug. 19, 2020.