403(b) Contribution Limits for 2007

Awhile back I mentioned that I had opened an optional 403(b) account with Vanguard. I have a basic defined contribution plan into which I contribute 5% of my salary, and my employer contributes an additional 8.2% of my salary. We also have Roth IRAs. However, we’re in a position to do more in terms of saving for retirement, and I’d also like to minimize our tax hit at the end of the year. So how much can we stuff into our 403(b)? I’ve alluded to this previously, but here’s are some details regarding 403(b) contribution limits for 2007…

» Basic salary deferral limit (how much you can contribute): $15, 500/year

» Lifetime catch-up: $3, 000/year*

» Age 50+ catch-up: $5, 000/year**

» Total (employee + employer): 100% of your “includible compensation” ($45, 000 max)

Keep in mind that these are based on IRS guidance, and your employer may or may not have additional restrictions.

*Available to employees with 15 or more years of service with a qualified organization. May allow you to increase your contributions above the basic salary deferral limit by up to $3, 000 per year, up to a lifetime catch-up limit of $15, 000. To qualify, the participant has to have contributed an average of less than $5, 000 per year to the plan.

**Participants age 50 and over may be eligible to make additional annual contributions beginning in the year in which they turn 50. If the participant is already making the maximum contribution, then he/she may be able to contribute an additional $5, 000/year. This $5, 000 annual limit refers to the total catch-up contributions made to qualified retirement plans, 403(b) plans, simplified employee pension (SEP) plans, and SIMPLE plans in any one year.