4048 / What is the special increase to the limit on amounts contributed to a tax sheltered annuity plan under a salary reduction agreement for employees who have completed 15 years of service?
A special increased limit is provided for amounts contributed to 403(b) plans under a salary reduction agreement in the case of an employee who has completed 15 years of service with an educational institution, hospital, health and welfare service agency (including a home health service agency or an adoption agency), a church (or a convention or association of churches), or church-related organization.1
The limit for any one year is increased by the lesser of the following:
(1) $3,000;
(2) $15,000, reduced by the sum of amounts already excluded for prior taxable years by reason of this special exception and the aggregate amount of designated Roth contributions for prior taxable years; or
(3) the excess of $5,000 multiplied by the number of years of service the employee has with the organization over all elective deferrals to 403(b) plans, 401(k) plans, SEPs, and SIMPLE IRAs.2
The current limit ($24,500 in 2026) is the amount subject to increase by the above amount.3
The 15 years of service requirement takes into account only employment with the qualified organization. Thus, an employee who has not completed at least 15 years of service taking into account only employment with the qualified organization is not a qualified employee.4 For the rule coordinating the 15 years of service catch-up with the age 50 catch-up, see Q 4050.
1. Treas. Reg. § 1.403(b)-4(c)(3). See, e.g., Let. Rul. 200934012.
2. IRC § 402(g)(7). See also IRS Publication 571, Tax Sheltered Annuity Plans (January 2019).
3. Notice 2023-75.
4. Treas. Reg. § 1.403(b)-4(c)(3)(iii). See Let. Rul. 200934012 ($3,000 catch-up contribution permitted where the employee had worked for the same college for 24 years).