2017 403(b) Contribution Limit
For 2017, the 403(b) Contribution Limit figures are $18,000 (Elective deferral limit) and +$6,000 (Catch-up limit, age 50 and over).
Effective 2017-01-01Source: Notice 2016-62 (IRS)Verified 2026-09-03
Compared with 2016
Every figure on this page is unchanged from 2016.
| Item | 2016 | 2017 | Change |
|---|---|---|---|
| Elective deferral limit | $18,000 | $18,000 | +$0 (+0.0%) |
| Catch-up limit, age 50 and over | +$6,000 | +$6,000 | +$0 (+0.0%) |
Who it applies to
Participants in section 403(b) retirement plans.
What changed this year, and why
The 2017 elective deferral limit under section 402(g) and the catch-up contribution limit under section 414(v)(2)(B)(i) for participants in section 403(b) plans, as published by IRS Notice 2016-62.
Common questions
- What is the elective deferral limit for 2017 under section 403(b)?
- Under section 402(g), the elective deferral limit for 2017 is $18,000, unchanged from the prior year.
- Is there a catch-up contribution limit for participants age 50 or over?
- Under section 414(v)(2)(B)(i), participants age 50 or over may defer an additional $6,000 for 2017.
The other ceiling: total contributions of 100% of pay
The $18,000 deferral limit is not the only ceiling on a 403(b) account, and for a lower-paid participant it is not the binding one. The limit on annual additions caps everything that goes in - your elective deferrals, your employer's nonelective contributions and any after-tax contributions together - at the lesser of $54,000 for 2017 or 100% of your includible compensation for your most recent year of service. The second half of that test is what catches people. Someone who worked part of the year, or whose includible compensation is modest against a generous employer contribution, hits their own pay before they come near the dollar figure, and contributions above it are excess whoever made them. Work out both ceilings; the smaller one is the real limit on the account.
The first component of MAC is the limit on an nual additions. This is a limit on the total contri butions (elective deferrals, nonelective contri butions, and aftertax contributions) that can be made to your 403(b) account. The limit on an nual additions generally is the lesser of: $53,000 for 2016 and $54,000 for 2017, or 100% of your includible compensation for your most recent year of service.
Publication 571 (2017), Tax-Sheltered Annuity Plans (403(b) Plans) (IRS)
Two limits, and your MAC is the lesser of them
Your 403(b) account is subject to two separate contribution ceilings each year. The first is the limit on annual additions, which covers all types of contributions - employee deferrals, employer contributions, and after-tax amounts - combined. The second is the limit on elective deferrals, which applies only to the salary reduction contributions you make. Your actual maximum amount contributable, or MAC, is determined by taking the lesser of these two figures. If your only contributions are elective deferrals under a salary reduction agreement, you must calculate both limits and your MAC becomes the lower result. The verified elective deferral limit for 2017 is $18,000. Catch-up contributions for participants age 50 or older sit outside the MAC calculation entirely and are not counted when testing whether you have exceeded either ceiling. Understanding how these two limits interact ensures you know exactly how much can be contributed to your account in any given year without triggering excess contribution penalties.
Generally, contributions to your 403(b) account are limited to the lesser of: The limit on annual additions, or The limit on elective deferrals.
Publication 571 (2017), Tax-Sheltered Annuity Plans (403(b) Plans) (IRS)
The 15 years of service catch-up almost nobody uses
The 15-year rule is a special catch-up provision for long-term employees of certain organizations. If you have at least 15 years of service with an educational organization, hospital, home health service agency, health and welfare service agency, church, or convention or association of churches, and the plan allows it, your limit on elective deferrals can be increased. The increase is the least of three amounts: $3,000; $15,000 reduced by prior catch-ups under this rule; or $5,000 times your years of service minus total elective deferrals made in prior years. For 2017, if you qualify, your elective deferrals under this rule can be as high as $21,000. This provision is sometimes called the special section 403(b) catch-up or the years-of-service catch-up. It is separate from the age 50 catch-up, and if you qualify for both, amounts are allocated first under the 15-year rule and then as age 50 catch-up contributions.
15-Year Rule If you have at least 15 years of service with an educational organization (such as a public or private school), hospital, home health service agency, health and welfare service agency, church, or convention or association of churches (or associated organization) and it is allowed by the terms of the plan document, the limit on elective deferrals to your 403(b) ac count is increased by the least of: 1. $3,000; 2. $15,000, reduced by the sum of: a. The additional pretax elective defer rals made in prior years because of this rule, plus b. The aggregate amount of designated Roth contributions permitted for prior years because of this rule; or 3. $5,000 times the number of your years of service for the organization, minus the to tal elective deferrals made by your em ployer on your behalf for earlier years. If you qualify for the 15year rule (sometimes referred to as the special section 403(b) catchup or the yearsofservice catchup), your elective deferrals under this limit can be as high as $21,000 for 2016 and 2017.
Publication 571 (2017), Tax-Sheltered Annuity Plans (403(b) Plans) (IRS)
The age 50 catch-up sits on top of the limit
Participants who will reach age 50 by the end of the year can make additional catch-up contributions beyond the standard elective deferral limit. For 2017, the maximum catch-up contribution is $6,000. These catch-up contributions are not counted against your MAC, so the maximum amount that you are allowed to have contributed to your 403(b) account is your MAC plus your allowable catch-up contributions. To be eligible, you must meet three conditions: you will have reached age 50 by the end of the year, your employer's plan document allows for catch-up contributions, and the maximum amount of elective deferrals that can be made to your 403(b) account have been made for the plan year. The maximum amount of catch-up contributions is the lesser of $6,000 for 2016 and 2017, or the excess of your compensation for the year over the elective deferrals that are not catch-up contributions.
Catchup contributions aren’t counted against your MAC. Therefore, the max imum amount that you are allowed to have contributed to your 403(b) account is your MAC plus your allowable catchup contribu tions.
Publication 571 (2017), Tax-Sheltered Annuity Plans (403(b) Plans) (IRS)
What to do when too much went in
Nobody tells you that too much went in, so the check is yours to run: at the close of the year, or early in the next one, work your MAC out again on the pay you actually received and the contributions actually made, and compare the two. Anything above that recomputed figure, catch-ups aside, is excess. The people most exposed are the ones whose pay or job moved during the year, because a MAC built on a salary that no longer applies is the usual way an excess appears at all, and reworking it on an estimate of compensation revised mid-year prevents the problem rather than discovering it afterwards. What an excess costs then depends on which of two kinds it is, and identifying that is the first real step. An excess annual addition is money over your limit on annual additions, and its effect is immediate: the amount is included in your income for the year it went in. Where the 403(b) money sits in mutual funds, going over that limit can also draw an excise tax of 6% on the excess contribution - a charge that reaches neither an annuity account nor an excess elective deferral. An excess elective deferral is the other kind, and it is measured against the elective deferral limit, $18,000 for 2017, rather than against the ceiling on annual additions.
How Do I Know If I Have Excess Contributions? At the end of the year or the beginning of the next year, you should refigure your MAC based on your actual compensation and actual contri butions made to your account. If the actual contributions (not including catchup contributions) to your account are greater than your MAC, you have excess contri butions. If, at any time during the year, your em ployment status or your compensation changes, you should refigure your MAC using a revised estimate of compensation to prevent excess contributions. What Happens If I Have Excess Contributions? Certain excess contributions in a 403(b) ac count can be corrected. The effect of an excess 403(b) contribution will depend on the type of excess contribution. Types of excess contributions. If, after checking your actual contributions, you deter mine that you have an excess, the first thing is to identify the type of excess that you have. Ex cess contributions to a 403(b) account are cate gorized as either an: Excess annual addition, or Excess elective deferral. Excess Annual Addition An excess annual addition is a contribution (not including catchup contributions) that is more than your limit on annual additions. To deter mine your limit on annual additions, see chap ter 3 (chapter 5 for ministers or church employ ees). In the year that your contributions are more than your limit on annual additions, the excess amount will be included in your income. Excise Tax If your 403(b) account invests in mutual funds, and you exceed your limit on annual additions, you may be subject to a 6% excise tax on the excess contribution. The excise tax doesn’t ap ply to funds in an annuity account or to excess deferrals.
Publication 571 (2017), Tax-Sheltered Annuity Plans (403(b) Plans) (IRS)
You have until April 15 to correct an excess deferral
If you contribute more than the annual limit to your 403(b) plan, you have until April 15 of the following year to receive a corrective distribution of the excess amount. The plan can distribute the excess deferral, along with any income that is allocable to that excess, no later than April 15 of the year following the year in which the excess deferral was originally made. When April 15 falls on a Saturday, Sunday, or legal holiday, the deadline is extended to the next business day. You must either notify the plan of the excess deferral amount or designate a distribution as an excess deferral correction, and the plan may require this notification in writing. Note that plans are not required to permit distributions of excess deferrals, so you should contact your plan administrator promptly if you discover you have exceeded the limit.
Correction of excess deferrals after the year. If you have excess deferrals for a year, you may receive a correcting distribution of the excess deferral no later than April 15 of the fol lowing year. The plan can distribute the excess deferral (and any income allocable to the ex cess) no later than April 15 of the year following the year the excess deferral was made.
Publication 571 (2017), Tax-Sheltered Annuity Plans (403(b) Plans) (IRS)
Your limit is shared with every other elective-deferral plan you have
Your 403(b) contribution limit is not separate from other retirement plans you may participate in. If you work for multiple employers or participate in more than one retirement plan, you must combine all elective deferrals across all plans to determine whether you have exceeded the annual limit. This includes contributions to 401(k) plans (to the extent excluded from income), Roth contribution programs, section 501(c)(18) plans, SIMPLE plans, SARSEP plans, and the federal Thrift Savings Plan, among others. Even if you have multiple 403(b) accounts with different employers, you must aggregate all elective deferrals to ensure the total does not exceed the annual limit. This aggregation rule prevents individuals from circumventing contribution limits by spreading contributions across multiple plans or employers.
403(b) plan and another retirement plan. If, during the year, contributions in the form of elective deferrals are made to other retirement plans on your behalf, you must combine all of the elective deferrals to determine if they are more than your limit on elective deferrals.
Publication 571 (2017), Tax-Sheltered Annuity Plans (403(b) Plans) (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Notice 2016-62 (IRS)
- Elective deferral limit
The limitation under § 402(g)(1) on the exclusion for elective deferrals described in § 402(g)(3) remains unchanged at $18,000.
- Catch-up limit, age 50 and over
The dollar limitation under § 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in § 401(k)(11) or § 408(p) for individuals aged 50 or over remains unchanged at $6,000.