Publication 571: Tax-Sheltered Annuity Plans (403(b) Plans); Introductory Material

This is archived information that pertains only to the 2004 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Table of Contents

What's New for 2004

Limit on elective deferrals. For 2004, the limit on elective deferrals has been increased from $12,000 to $13,000. See chapter 4.

Limit on annual additions. For 2004, the limit on annual additions has been increased from $40,000 to $41,000. See chapter 3.

Catch-up contributions for persons age 50 or over. If you will be age 50 or over by the end of 2004, you may be permitted to make additional catch-up contributions of up to $3,000 to your 403(b) plan. See chapter 6.

What's New for 2005

Limit on elective deferrals. For 2005, the limit on elective deferrals has been increased from $13,000 to $14,000. See chapter 4.

Limit on annual additions. For 2005, the limit on annual additions has been increased from $41,000 to $42,000. See chapter 3.

Catch-up contributions for persons age 50 or over. If you will be age 50 or over by the end of 2004, you may be permitted to make additional catch-up contributions of up to $4,000 to your 403(b) plan for 2005. See chapter 6.

Proposed Regulations

Proposed Income Tax Regulations pertaining to tax-sheltered annuities within the meaning of section 403(b) of the Internal Revenue Code were issued on November 16, 2004. Generally, when finalized, these regulations will be effective for taxable years beginning after December 31, 2005. The Proposed Regulations, REG-155608-02, 2004-49 I.R.B 924 are available at www.irs.gov.

Reminder

Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

Introduction

This publication can help you better understand the tax rules that apply to your 403(b) (tax-sheltered annuity) plan.

In this publication you will find information to help you:

Determine the maximum amount that can be contributed to your 403(b) account in 2005.
Determine the maximum amount that could have been contributed to your 403(b) account in 2004.
Identify excess contributions.
Understand the basic rules for claiming the retirement savings contributions credit.
Understand the basic rules for distributions and rollovers from 403(b) accounts.

This publication does not provide specific information on the following topics.

Distributions from 403(b) accounts. This is covered in Publication 575, Pension and Annuity Income.
Rollovers. This is covered in Publication 590, Individual Retirement Arrangements (IRAs).

How to use this publication. This publication is organized into chapters to help you find information easily.

Chapter 1 answers questions frequently asked by 403(b) plan participants.

Chapters 2 through 6 explain the rules and terms you need to know to figure the maximum amount that could have been contributed to your 403(b) account for 2004 and the maximum amount that can be contributed to your 403(b) account in 2005.

Chapter 7 provides general information on the prevention and correction of excess contributions to your 403(b) account.

Chapter 8 provides general information on distributions, and transfers and rollovers.

Chapter 9 provides blank worksheets that you will need to accurately and actively participate in your 403(b) plan. Filled-in samples of most of these worksheets can be found throughout this publication.

Chapter 10 explains the rules for claiming the retirement savings contributions credit.

Comments and suggestions. We welcome your comments about this publication and your suggestions for future editions.

You can write to us at the following address:

Internal Revenue Service
TE/GE and Specialty Forms and
Publications Branch
SE:W:CAR:MP:T:T:SP
1111 Constitution Ave. NW, IR-6406
Washington, DC 20224

We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.

You can email us at *[email protected]. (The asterisk must be included in the address.) Please put “Publications Comment” on the subject line. Although we cannot respond individually to each email, we do appreciate your feedback and will consider your comments as we revise our tax products.

Useful Items - You may want to see:

Publication

517 Social Security and Other Information for Members of the Clergy and Religious Workers
575 Pension and Annuity Income
590 Individual Retirement Arrangements (IRAs)

Form (and Instructions)

W-2
Wage and Tax Statement
1099-R
Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
5330
Return of Excise Taxes Related to Employee Benefit Plans

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