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403(b) Contribution Limits for 2009, 2008 - 2005

A 403(b) tax-sheltered annuity (TSA) plan is a retirement savings plan, which is available for public education organizations, certain tax-exempt organizations, and certain self-employed ministers in the US.

Basically, the features of 403(b) plans are very similar to the 401(k) plans - the key difference between the two is mainly in the investment options.

Just as with a 401(k) plan, 403(b) plans allow employees to make salary deferral contributions to their 403(b) plan sponsored by the employer. These contributions are limited by regulatory caps.

403(b) Contribution Limits
Year AGE 49 & BELOW AGE 50 & ABOVE
2005 $14,000 $18,000
2006 $15,000 $20,000
2007 $15,500 $20,500
2008 $15,500 $20,500
2009 $16,500 $22,000

As you can see from the table above the 403(b) contribution limit is increased from $15,500 for 2008 to $16,500 for 2009. For the employees above the age of 50 the "catch-up" amount is increased too - to $5,500 for 2009 (which sets the 403(b) contribution limit at $22,000 for those above the age 50).

The contributions to a 403(b) annuity and the earnings on the retirement money are tax deferred.

If your employer offers both a 403b plan and a 401k plan, you may participate in both at the same time. However, in this case the combined total salary deferral contribution you are allowed to make to both plans should not exceed the contribution limit set for the particular fiscal year (for example, if you are 45, in 2007 you may choose to contribute $9,000 to your 403(b) plan and $6,500 to your 401(k) plan).

When the employee changes employers or retires, they may carry the 403(b) annuity with them.

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