Author Topic: Annual additions limit question (CPA bat signal please)  (Read 385 times)

fuzzy math

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Annual additions limit question (CPA bat signal please)
« on: September 09, 2018, 02:30:19 PM »
While searching for retirement contribution limits for 2019, I came across the Annual addition limit term. I had previously been exposed to this concept by my employer, but without the actual term name I couldn't search for the definition of it.

Various websites list this limit as

"The IRC 415(c) annual addition limit for 2018 is $55,000. This limit applies to the total amount of contributions made on behalf of a participant in a calendar year." (TSP website)

"Annual Addition Limit   $55,000   IRC 415(c)   
An additional limit imposed on the total amount of all contributions made on behalf of an employee in a calendar year. This limit is per employer and includes employee contributions (tax-deferred, after-tax, and tax-exempt), Agency/Service Automatic (1%) Contributions, and Matching Contributions. For 415(c) purposes, working for multiple Federal agencies or services in the same year is considered having one employer." (also TSP site)


"Annual Additions Limit. The total employer plus employee contributions to all defined contribution plans by the same employer will increase by $1,000 from $55,000 in 2018 to $56,000 in 2019." (the finance buff) I recognize the 2019 limits are speculation until October.

So my question is, I think my 2017 taxes were done wrong and I've likely screwed up 2018 also by not catching this. I've been trying to come close to $55k on my own, not including employer match.

Here's what's listed on my 2017 W2

12a  C 83.16  (life insurance?)

12b G  11687.00  (457b)

12c P   6650.00  (moving?)

12d W 6750.00  (HSA)


14 Other

Retire 2008.87  (my mandatory pension contribution)

Irrevoc   34991.00 (y irrevocable 403b election)




So my questions are basically - according to what's on my W2 I'm within the limit (pension + 457 + 403) = $48,686
But the definition seems to state that employer based contributions are also part of the $55k limit. I do not see anywhere on my W2 that this amount (457b match at 5% or $6650) would be listed. So is this a scouts honor sort of thing? If I am being literal I also should include my employer's contributions to my pension, which would add in another $10k. Both my employer match 457 match and pension contribution show up on my paychecks but are nowhere to be found on the W2.

Advice please?


maizeman

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Re: Annual additions limit question (CPA bat signal please)
« Reply #2 on: September 09, 2018, 03:36:00 PM »
A pension shouldn't be considered defined contribution plan (it's a defined benefit plan) so that at least shouldn't count towards the $56,000/cap (neither employee nor employer contributions).

I think the 457 might not count either as it is a completely separate bucket from the 401k/403b, but will defer to an actual CPA or other tax expert on that one. (Edit, as I wrote this MDM was already posting and explaining that you don't in fact have to worry about this.)

fuzzy math

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Re: Annual additions limit question (CPA bat signal please)
« Reply #3 on: September 09, 2018, 04:44:35 PM »
Advice please?
Relax. :)

The 457b amount is not included in the calculation for the 415c limit.  See 403b Plan Fix It Guide Your 403b plan doesnt limit the total employer and employee contributions to not exceed the IRC Section 415c limits | Internal Revenue Service.

So is this correct then? I have 4 separate buckets and the $55k only applies to the 403b?

457 b limit 18.5k
403b limit 55k
401a - where my 457b matching is placed
Pension

It would be a real stretch goal to be able to max out all of those, but perhaps someday I will get there to have this distinction matter!

Additionally, I only have $38k a year going into my irrevocable 403b. I cannot change this amount. If I want to set up my regular 403b I have to fill out a form. If so does that become a separate line item on my W2 (and separate acct) or a merged acct that consists of a partially irrevocable and partially elective account?

I really appreciate your input. My organization of 10k+ ppl only has 1 HR person who deals with this stuff and I don't think she understood it well enough to explain it to me at the time.

fuzzy math

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Re: Annual additions limit question (CPA bat signal please)
« Reply #4 on: September 14, 2018, 10:36:06 AM »
@MDM 
Could you please clarify for me? I really appreciate it


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MDM

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Re: Annual additions limit question (CPA bat signal please)
« Reply #5 on: September 14, 2018, 10:57:13 AM »
So is this correct then? I have 4 separate buckets and the $55k only applies to the 403b?

457 b limit 18.5k
403b limit 55k
401a - where my 457b matching is placed
Pension

It would be a real stretch goal to be able to max out all of those, but perhaps someday I will get there to have this distinction matter!

Additionally, I only have $38k a year going into my irrevocable 403b. I cannot change this amount. If I want to set up my regular 403b I have to fill out a form. If so does that become a separate line item on my W2 (and separate acct) or a merged acct that consists of a partially irrevocable and partially elective account?

I really appreciate your input. My organization of 10k+ ppl only has 1 HR person who deals with this stuff and I don't think she understood it well enough to explain it to me at the time.
Assuming the pension is a defined benefit (as opposed to defined contribution) plan, it is separate.

Your 457b contribution limit of $18.5K is separate.

The 415(c) limit covers 401 and 403 contributions at the same employer.

The phrase "irrevocable 403b" is unfamiliar to me.

A couple of links, one in plainer English than the other, are below.
Are catch-up contributions included in the 415 limit? | Investopedia
403(b) Plan Plan Aggregation in Determining Compliance with IRC Section 415(c) | Internal Revenue Service

fuzzy math

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Re: Annual additions limit question (CPA bat signal please)
« Reply #6 on: September 14, 2018, 01:31:52 PM »
It was a pre employment election I made that I can’t change.

Thanks for the help. My pension is defined benefit so that’s good. And I’m glad to finally know which pots are which!


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