Tax Sheltered Annuities (403b & 457b)
Maximum Allowable Contribution (MAC) Limits for 2021
TSA Consulting Group (TSACG) is committed to providing our clients with the most current 403(b), 457(b), and 401(k) Plan information as it is released by the IRS. The latest IRS information concerning MAC limits indicates that the normal limit remains unchanged for calendar year 2021.
MAC Limits for 2021
The normal calendar year limit for 403(b), 457(b) and 401(k) plans will remain unchanged at $19,500 for 2021.
The age-based additional amount (age 50 by 12/31/2021) remains unchanged at $6,500 for 2021.
Any other catch-up options that may be applicable to your Plan(s) remain unchanged.
Examples
All employees, regardless of age or years of service, may contribute up to $19,500 to their 403(b), 457(b) or 401(k) account in 2021. (The limit is coordinated for 403(b) and 401(k) accounts. 457(b) accounts are not coordinated with other plans.)
Employees who will attain age 50 by 12/31/2021 may contribute an additional $6,500 to 403(b), 457(b) and/or 401(k) accounts in 2021. (This limit is coordinated for 403(b) and 401(k) accounts.)
IRC §415 Limit
The overall employee and employer contribution limit for 401(a), 401(k) and 403(b) plans increases by $1,000 to a total of $58,000 effective January 1, 2021. This overall defined contribution limit is of special importance to those plan sponsors with Special Pay Plans that are designed to accommodate accumulated leave payments.
This information is available on our website on the "Contribution Guidelines" page:
Questions regarding this information should be directed to your Plan Consultant.
April Young
Program Consultant, Western Region
Email April Young
5 Yacht Club Drive NE,
Fort Walton Beach, FL 32548
Direct: 1.888.777.5827 ext. 1304
Cellular: 602.686.5500Fax: 1.866.371.8870
Please return this form to Tawnya Pulsipher (Email)
Questions about the form email April Young (Email)
Tax-sheltered annuities for companies approved by the District.
Employees may select an investment provider from the list of approved District providers. A salary reduction agreement must be completed, signed, and returned to the District payroll department. For more detailed information and requirements, refer to the appropriate 403(b)/457(b) plan documents, universal availability notice and deduction authorization forms.
Contact: Greg Smith
Cell Phone: 928-434-0801
Email Greg Smith
Maximum Allowable Contribution (MAC) Calculator
TSACG provides many resources for both Plan Sponsors and employees to use to make participation in 403(b) and/or 457(b) plans easier and more understandable. One resources that employees will find useful is the Maximum Allowable Contribution (MAC) calculator that we house on our website. Users simply need to input requested information in order to obtain an estimate of the amount they can voluntarily contribute to their account during the current calendar year. For those wanting to take advantage of additional catch-up options when available, the calculator includes fields for the user to input the necessary information needed to calculate the total amount, or limit, they may be eligible for based on their details.
The calculator is accessible on our secure website 24/7, direct URL
April Young
Program Consultant, Western Region
Email April Young
5 Yacht Club Drive NE,
Fort Walton Beach, FL 32548
Direct: 1.888.777.5827 ext. 1304
Cellular: 602.686.5500Fax: 1.866.371.8870
Basic Annual Limit
$19,500 for 2020 and $19,000 for 2019
The calendar year limits for elective deferrals are defined as 100% of compensation up to $19,500 for 2020 and $19,000 for 2019. This limit applies to all employees.
Service Based “Catch-up” Limit - 402(g) - Applicable to 403(b) Only
Employees with fifteen or more years of service with the school district may be eligible for a special higher annual limit of $22,500 for 2020 ($3,000 additional per year). To qualify, a participant’s prior average annual contributions must not exceed $5,000 per year. This extra annual amount of $3,000 per year is capped at a cumulative limit of $15,000. The participant’s age is not a factor for determining eligibility for this higher limit. Employees who qualify for this catch-up must take this amount prior to taking advantage of the Age-Based Catch-up. The special Catch-Up provision is calculated and used prior to using the Age-Based additional amount.
Excess contributions occur when the total contributions are greater than the maximum contribution limit (MAC), resulting in additional taxes and/or penalties.
Age Based Additional Amount
2020 - Employees who are age 50 or older by December 31, 2020, may contribute an additional $6,500 above the basic 2020 annual limit of $19,500 for a total of $26,000.
2019 - Employees who are age 50 or older by December 31, 2019, may contribute an additional $6,000 above the basic 2019 annual limit of $19,000 for a total of $25,000.
The participant’s years of service with their employer is not a factor in determining eligibility for this higher limit.
Employees who contribute to both a 403(b) and 401(k) account are limited to one age-based additional amount per year between the accounts. 457(b) accounts also have an Age-Based additional amount that does not offset the 403(b) and/or 401(k) amount.
Contribution Accounting Formula
Step 1: The Basic Annual Amount is reduced by the following:
Contributions made to all plans of the employer including 401(k) but excluding 457(b).
403(b) contributions made to other employer plans, Contributions to SEP or 401(k) in which the employee would have a 50% interest.
Step 2: Employees eligible for the Service Based catch-up must apply this amount prior to utilizing the Age Based catch-up.
Step 3: The eligible age based limitation is applied to the final basic annual limitation.
These rules are explained further in IRS Publication 571. Click here to view Publication 571 on the IRS website.
Annual Additions Limits
Limit on annual additions
The limit on annual additions (the combination of all employer contributions and employee elective deferrals to all 403(b) accounts) generally is the lesser of:
$57,000 for 2020 and $56,000 for 2019, or
100% of includible compensation for the employee's most recent year of service.
Generally, includible compensation is the amount of taxable wages and benefits the employee received in the employee's most recent full year of service.
Participants should seek further information regarding their MAC limit each year from their account representative or professional advisor. Click here to go to our online MAC Calculator.
April Young |
Program Consultant, Western Region
Email April Young
5 Yacht Club Drive NE,
Fort Walton Beach, FL 32548
Direct: 1.888.777.5827 ext. 1304
Cellular: 602.686.5500Fax: 1.866.371.8870
TSA Consulting Group, Inc.
Employer/Client Information Release
April 1, 2020
Coronavirus Aid, Relief, and Economic Security Act
On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES) in an effort to provide relief to those affected by COVID-19 and its economic impact. This legislation includes significant changes that make it easier for participants to access funds from employer sponsored retirement plans such as 403(b) and 457(b) plans.
TSA Consulting Group, Inc. (TSACG) has been monitoring the CARES Act throughout the legislative process and is prepared to make the appropriate system and document updates for our plan sponsor clients. The following is a brief summary of certain key changes for 403(b) and 457(b) plans:
Required Minimum Distributions - Required Minimum Distributions (RMD) have been waived for 2020. This is a required change and has been implemented by TSACG effective March 27, 2020.
Coronavirus Distributions - Until December 31, 2020, eligible participants may take a distribution up to $100,000 across all plans. Distributions are not subject to 10% withdrawal penalties. To be eligible, the participant or their spouse or dependent must be diagnosed with COVID-19, or the participant must have experienced an adverse financial consequence due to COVID-19 (ex: furlough, reduction in hours, unable to work due to childcare, loss of business, or other factors identified by the Secretary of the Treasury). This provision is optional, and not required.
Plan Loans - Until September 23, 2020, loan limits are increased to the lesser of $100,000 or 100% of the participant’s vested account balance. Participants with a loan repayment due after March 27, 2020, may defer payments for up to one year. This provision is optional, and not required.
In the interest of supporting plan sponsors in this difficult time, our firm will update our systems to permit the above optional provisions immediately unless we receive direction from you to the contrary. We will provide amendments to your 403(b) and/or 457(b) plan documents upon receipt of guidance from the IRS. As a governmental employer, the IRS allows an extended timeframe for plan document amendments with a current deadline of December 31, 2024
If you have any questions about the above information or its impact on your plan(s), please contact your Plan Consultant.
TSA Consulting Group, Inc.
(888) 777-5827
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April Young
Program Consultant, Western Region
Email April Young
5 Yacht Club Drive NE,
Fort Walton Beach, FL 32548
Direct: 1.888.777.5827 ext. 1304
Cellular: 602.686.5500Fax: 1.866.371.8870
February 2020 | TSACG
Contributions Guidelines
Basic Annual Limit
$19,500 for 2020 and $19,000 for 2019
The calendar year limits for elective deferrals are defined as 100% of compensation up to $19,500 for 2020 and $19,000 for 2019. This limit applies to all employees.
Service Based “Catch-up” Limit - 402(g) - Applicable to 403(b) Only
Employees with fifteen or more years of service with the school district may be eligible for a special higher annual limit of $22,500 for 2020 ($3,000 additional per year). To qualify, a participant’s prior average annual contributions must not exceed $5,000 per year. This extra annual amount of $3,000 per year is capped at a cumulative limit of $15,000. The participant’s age is not a factor for determining eligibility for this higher limit. Employees who qualify for this catch-up must take this amount prior to taking advantage of the Age-Based Catch-up. The special Catch-Up provision is calculated and used prior to using the Age-Based additional amount.
Excess contributions occur when the total contributions are greater than the maximum contribution limit (MAC), resulting in additional taxes and/or penalties.
Age Based Additional Amount
2020 - Employees who are age 50 or older by December 31, 2020, may contribute an additional $6,500 above the basic 2020 annual limit of $19,500 for a total of $26,000.
2019 - Employees who are age 50 or older by December 31, 2019, may contribute an additional $6,000 above the basic 2019 annual limit of $19,000 for a total of $25,000.
The participant’s years of service with their employer is not a factor in determining eligibility for this higher limit.
Employees who contribute to both a 403(b) and 401(k) account are limited to one age-based additional amount per year between the accounts. 457(b) accounts also have an Age-Based additional amount that does not offset the 403(b) and/or 401(k) amount.
Contribution Accounting Formula
Step 1: The Basic Annual Amount is reduced by the following:
Contributions made to all plans of the employer including 401(k) but excluding 457(b).
403(b) contributions made to other employer plans, Contributions to SEP or 401(k) in which the employee would have a 50% interest.
Step 2: Employees eligible for the Service Based catch-up must apply this amount prior to utilizing the Age Based catch-up.
Step 3: The eligible age based limitation is applied to the final basic annual limitation.
These rules are explained further in IRS Publication 571. Click here to view Publication 571 on the IRS website.
Annual Additions Limits
Limit on annual additions
The limit on annual additions (the combination of all employer contributions and employee elective deferrals to all 403(b) accounts) generally is the lesser of:
$57,000 for 2020 and $56,000 for 2019, or
100% of includible compensation for the employee's most recent year of service.
Generally, includible compensation is the amount of taxable wages and benefits the employee received in the employee's most recent full year of service.
Participants should seek further information regarding their MAC limit each year from their account representative or professional advisor. Click here to go to our online MAC Calculator.
IRC 403(b) Tax-Sheltered Annuity Plans
IRC 403(b) Tax-Sheltered Annuity Plans
A 403(b) plan (also called a tax-sheltered annuity or TSA plan) is a retirement plan offered by public schools and certain 501(c)(3) tax-exempt organizations. Employees save for retirement by contributing to individual accounts. Employers can also contribute to employees' accounts.
Learn the basics of a 403(b) plan
Who can participate in the plan, plan contributions, withdrawals
Set up a 403(b) plan, written program requirements, optional provisions, sample plan language
Operate and maintain a 403(b) plan
Reporting and nondiscrimination testing requirements, periodically reviewing the plan
Find, fix and avoid plan errors
Requirements for ending a 403(b) plan
Forms, publications and other 403(b) resources
April Young |
Program Consultant, Western Region
Email April Young
5 Yacht Club Drive NE,
Fort Walton Beach, FL 32548
Direct: 1.888.777.5827 ext. 1304
Cellular: 602.686.5500Fax: 1.866.371.8870