Contribution Guidelines

Basic Annual Limit - $16,500 for 2009* The 2009 calendar year limit for elective deferrals is defined as 100% of compensation up to $16,500 total. This limit applies to all employees with less than fifteen years of service with the school district and less than age 50 as of December 31, 2009. Service Based “Catch-up” Limit - 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 $19,500 ($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. Age Based Additional Amount

Employees who are age 50 or older by December 31, 2009 may contribute an additional $5,500 above the basic 2009 annual limit of $16,500 for a total of $22,000. The participant’s years of service with the school district or college 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.

Contribution Accounting Formula

Step 1: Calendar year contributions are first applied toward the participant's Basic Annual Limit for that year. Step 2: Calendar year contributions that exceed the Basic Annual Limit are applied toward any eligible Service-Based "Catch-Up" limit - 403(b) Only. Step 3: Calendar year contributions that exceed the Basic Annual Limit plus the Service-Based limit are applied towards any eligible Age-Based Addition limit.

*Employees who contribute to both a 401(k) and a 403(b) account during the same calendar year are subject to a coordinated maximum limit on contributions. The 403(b) MAC limit is reduced, dollar-for-dollar, by the amount contributed to a 401(k) account during the same calendar year.

For more information concerning rules and regulations for 403(b) accounts, see IRS Publication 571. You may download a copy of this official publication from the Internal Revenue Service website at www.irs.gov For a more detailed description of the Tax Law changes, visit the "What's New" section of our site.