Chapter 4
Limit on Annual Additions for 2001

This chapter applies only to contributions made in 2001. For the rules on figuring the limit on annual additions for 2002, see chapter 9.

The second component of MAC for 2001 is the limit on annual additions. This is a limit on the total contributions (elective deferrals, nonelective deferrals, and after-tax contributions) that could have been made to your account for 2001. You can figure the limit on annual additions using either of the following.

• The general rule, or
• An alternative limit.

This chapter will discuss figuring the limit on annual additions using the general rule. For information on the alternative limits, see chapter 6.

Under the general rule, the limit on annual additions is the lesser of:

• $35,000, or
• 25% of your compensation for your limitation year.

Generally, your limitation year is the calendar year. However, you can elect to change your limitation year to any consecutive 12-month period. To do this, attach a statement to your individual income tax return for the year you make the change.

You can use Worksheet D in chapter 13 to figure your limit on annual additions under the general rule.

More than one 403(b) account. If you contributed to more than one 403(b) account you must combine the contributions made to all 403(b) accounts on your behalf by your employer.

Participation in a qualified plan. If you participated in a 403(b) plan and a qualified plan, you must combine contributions made to your 403(b) account with contributions to a qualified plan and simplified employee pensions of all corporations, partnerships, and sole proprietorships in which you have more than 50% control.

• Figuring the Limit on Annual Additions

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