403b Maximum Contribution Calculator

403b Contribution Rule:

\[ \text{Max Contribution} = \min(\text{Salary} \times 0.2, \text{IRS Limit}) \]

Maximum Contribution:

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1. What is a 403b Maximum Contribution?

The 403(b) maximum contribution is the highest amount you can contribute to your 403(b) retirement plan in a given year. It's determined by either 20% of your salary or the IRS annual limit, whichever is lower.

2. How Does the Calculator Work?

The calculator uses the 403b contribution rule:

\[ \text{Max Contribution} = \min(\text{Salary} \times 0.2, \text{IRS Limit}) \]

Where:

$ \text{Salary} $ — Your annual salary or compensation
$ \text{IRS Limit} $ — Annual contribution limit set by the IRS
$ 0.2 $ — 20% of salary limit for 403(b) plans

Explanation: The calculation takes the smaller value between 20% of your salary and the IRS annual contribution limit.

3. Importance of Contribution Limits

Details: Understanding your maximum contribution helps with retirement planning and ensures you don't exceed IRS limits, which could result in tax penalties.

4. Using the Calculator

Tips: Enter your annual salary and the current IRS limit (default is $22,500 for 2023). The calculator will determine your maximum allowed contribution.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between 403b and 401k limits?
A: While both have similar IRS limits, 403(b) plans have an additional 20% of salary limitation that doesn't apply to 401(k) plans.

Q2: Are catch-up contributions included?
A: No, this calculator shows the basic limit. Those aged 50+ can contribute an additional $7,500 (for 2023).

Q3: How often do IRS limits change?
A: IRS adjusts limits periodically for inflation, typically every 1-2 years.

Q4: Does employer matching count toward the limit?
A: No, employer contributions are separate from your elective deferrals.

Q5: What if I have multiple retirement accounts?
A: The IRS limit is shared across all 403(b) and 401(k) plans you participate in.