For 2003, the maximum amount an employee can contribute to a 401(k) plan is $12,000 except for catch-up contributions for employees age 50 or over (see the next topic). There are several different limits that apply to a 401(k) plan in addition to the overall contribution limit. The maximum you can contribute will depend on your salary and the type of 401(k) plan to which you are contributing.

The rules for retirement plans are complex. Your plan administrator should have written information about your particular plan that explains these limitations as well as other regulations that apply.

For further information, refer to Tax Topic 424, 401(k) plans.

References:

• Publication 575, Pension and Annuity Income
• Publication 560, Retirement Plans for Small Business
• Tax Topic 424, 401(k) plans

Elective deferrals into a section 401(k) plan are limited to $12,000 for 2003, except that employees age 50 or over may be eligible to make an additional contribution of up to $2000 in 2003. SeeTax Topic 424 401(K) plans, for more information.

References:

• Tax Topic 424 401 (k) plans

A 403(b) plan is a tax-sheltered annuity plan for employees of public schools and certain tax-exempt organizations. Under a special coverage and nondiscrimination rule, if any employee may make elective deferrals, the plan is considered discriminatory unless the opportunity to make contributions deferrals of more than $200 pursuant to a salary reduction agreement is available to all employees on a basis that does not discriminate in favor of highly compensated employees. For more information, refer to Internal Revenue Code section 403(b)(1)(D),(12)(A)(ii).

The maximum elective deferral for 2003 that an employee may make to a 403 (b) plan is $12,000. This maximum limit applies to an employee's aggregate pre-tax contributions to a 403 (b) plan and section 401 (k) plan. This maximum limit will increase by $1,000 each year through 2006. If you have at least 15 years of service with a public school system, hospital, home health service agency, health and welfare agency, church or convention or association of churches (or associated organization), the general limit on elective deferrals may be increased by up to $3,000 (See Publication 571 chapter 4). In addition, employees age 50 or over may be eligible to make catchup contributions of $2000 in 2003 (see Publication 571 chapter 6).

For more information about 403 (b) plans, refer to Publication 571, Tax Sheltered Annuity Plans 403 (b) Plans.

References:

• Publication 571, Tax Sheltered Annuity Plans 403 (b) Plans
• IRS Code Sec. 402(g) (1)