When the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) was passed, there was plenty of buzz about the perks it created for people with 401(k) plans and IRAs. But what does it mean for those with 403(b)s?
In 2002, the new contribution limits rise to $11,000, up from $10,500 in 2001, and people age 50 or older at any time during 2002 can contribute an additional $1,000, says Scott Dauenhauer. What’s more, people who are eligible for both a 403(b) plan and a 457 plan (the equivalent of a 401(k) for state and local government employees) can contribute the maximum amount to both plans, for a total of $22,000.
There’s also more portability: Starting this year, teachers who leave the field for private-sector jobs can finally roll money from a 403(b) plan into a 401(k) plan, and private-sector employees who become teachers can roll money from their 401(k) plans into a 403(b). Not all plans accept such rollovers, however.
Finally, in a small victory for those who think the world has more than enough acronyms already, the MEA (maximum exclusion allowance), a complex calculation used to determine how much an individual could contribute to a 403(b), was repealed as of January 1 of 2002.