Table of Contents
Chapter 2 introduced you to the term maximum amount contributable (MAC). Generally, your MAC is the lesser of your:
The worksheets in this chapter can help you figure the cost of incidental life insurance, your includible compensation, your limit on annual additions, your limit on elective deferrals, your limit on catch-up contributions, and your maximum amount contributable.
If your compensation is the same as, or more than, the projected amounts and the calculations are correct, then you should simply file these worksheets with your other tax records for the year.
If your compensation was lower than your estimated figures, you will need to check the amount contributed during the year to determine if contributions are more than your MAC.
At the beginning of each year, you should figure your MAC using a conservative estimate of your compensation. Should your income change during the year, you should refigure your MAC based on a revised conservative estimate. By doing this, you will be able to determine if contributions to your 403(b) account should be increased or decreased for the year.
At the beginning of the following year, you should refigure your MAC based on your actual earned income.
At the end of the current year or the beginning of the next year, you should check your contributions to be sure you did not exceed your MAC. This means refiguring your limit based on your actual compensation figures for the year. This will allow you to determine if the amount contributed is more than the allowable amounts, and possibly avoid additional taxes.
The following worksheets have been provided to help you figure your MAC.
Note. Use this worksheet to figure the cost of incidental life insurance included in your annuity contract. This amount will be used to figure includible compensation for your most recent year of service.
|1.||Enter the value of the contract (amount payable upon your death)||1.|
|2.||Enter the cash value in the contract at the end of the year||2.|
|3.||Subtract line 2 from line 1. This is the value of your current life insurance protection||3.|
|4.||Enter your age on your birthday nearest the beginning of the policy year||4.|
|5.||Enter the 1-year term premium for $1,000 of life insurance based on your age. (From Figure 3-1)||5.|
|6.||Divide line 3 by $1,000||6.|
|7.||Multiply line 6 by line 5. This is the cost of your incidental life insurance||7.|
Note. Use this worksheet to figure includible compensation for your most recent year of service.
Worksheet C. Limit on Catch-Up Contributions
Note. If you will be age 50 or older by the end of the year, use this worksheet to figure your limit on catch-up contributions.
|1.||Maximum catch-up contributions||1.||$5,500|
|2.||Enter your includible compensation for your most recent year of service||2.|
|3.||Enter your elective deferrals||3.|
|4.||Subtract line 3 from line 2||4.|
|5.||Enter the lesser of line 1 or line 4. This is your limit on catch-up contributions||5.|
Worksheet 1. Maximum Amount Contributable (MAC)
Note. Use this worksheet to figure your MAC.
|Part I. Limit on Annual Additions|
|1.||Enter your includible compensation for your most recent year of service||1.|
|3.||Enter the lesser of line 1 or line 2. This is your limit on annual additions||3.|
|Caution: If you had only nonelective contributions, skip Part II and enter the amount from line 3 on line 18.|
|Part II. Limit on Elective Deferrals|
|Note. If you have at least 15 years of service with a qualifying organization, complete lines 5 through 17. If not, enter zero (-0-) on line 16 and go to line 17.|
|5.||Amount per year of service||5.||$ 5,000|
|6.||Enter your years of service||6.|
|7.||Multiply line 5 by line 6||7.|
|8.||Enter the total of all elective deferrals made for you by the qualifying organization for prior years||8.|
|9.||Subtract line 8 from line 7. If zero or less, enter zero (-0-)||9.|
|10.||Maximum increase in limit for long service||10.||$15,000|
|11.||Enter the total of additional pre-tax elective deferrals made in prior years under the 15-year rule||11.|
|12.||Enter the aggregate amount of all designated Roth contributions permitted for prior years under the 15-year rule||12.|
|13.||Add line 11 and line 12||13.|
|14.||Subtract line 13 from line 10||14.|
|15.||Maximum additional contributions||15.||$ 3,000|
|16.||Enter the least of lines 9, 14, or 15. This is your increase in the limit for long service||16.|
|17.||Add lines 4 and 16. This is your limit on elective deferrals||17.|
|Part III. Maximum Amount Contributable|
|1If you participate in a 403(b) plan and a qualified plan, you must combine contributions made to your 403(b) account with contributions to a qualified plan and simplified employee pension plans of all corporations, partnerships, and sole proprietorships in which you have more than 50% control. You must also combine the contributions made to all 403(b) accounts on your behalf by your employer.|
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