Q: Can you update your prior Ask the Experts column on the maximum deferral limits when both a 403(b) and 457(b) plan are in place to reflect the 2024 limits?

Kimberly Boberg, Taylor Costanzo, Kelly Geloneck and David Levine, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

A: Absolutely! The 2024 limit is quite a bit of money, with the absolute maximum permissible deferral dependent on which catch-up contributions a plan sponsor offers and an employee’s eligibility for those provisions. In 2024, eligible employees who elect to make deferrals to both a 403(b) and 457(b) plan will generally be able to contribute up to $23,000 in deferrals to their 403(b) plan and another $23,000 in deferrals to their 457(b) plan, for a total of $46,000, provided that the employee earns at least $46,000 in compensation. (Note: If an employee receives employer contributions to a 457(b) plan, the $23,000 limit for that plan would be reduced by those contributions.)

If an employee is at least 50 years old by the end of 2024, and both the 403(b) and 457(b) plans offer an age-50+ catch-up election, the total deferral limit would increase to $61,000 ($23,000 + $7,500 catch-up to each plan for 2024). Please note that the age-50+ catch-up election is only available to to 457(b) plans that are governmental plans. If the 457(b) plan is not a governmental plan, an age-50+ catch-up is not permitted, and therefore, the combined limit would be $53,500 ($23,000 + $7,500 catch-up to the 403(b) plan + $23,000 to the 457(b) plan).

There are some more obscure elections which a small number of employees may use to further increase their contribution limits, provided the plan offers them. The first is the 457(b) three-year catch-up election, which allows the employee to contribute the lesser of twice the 457(b) limit or the 457(b) limit plus any unused limitations in prior years. If the plan offers the election and the employee qualifies, that could increase the maximum dollar deferral limit in the 457(b) plan to $46,000, making it possible for an employee to defer a total of $76,500 ($23,000 in deferrals + $7,500 in catch-up to the 403(b) plan + $23,000 in deferrals + $23,000 in three-year catch-up to the 457(b) plan) to both plans if the employee is older than 50. (Note: the three-year catch-up and the age-50+ catch-up cannot be used in the same year in the 457(b) plan.)

The second election is the 403(b) plan 15-year catch-up election, which would allow for up to an additional $3,000 to be deferred to the 403(b) plan (for a total of $79,500 when added to the scenario described above), if the plan permits the election and the employee qualifies. However, this particular election is so difficult for plan sponsors to administer that many have opted not to offer it.

The 2024 section 415(c) limit is $69,000. Keep in mind that as an employee’s deferrals increase, the section 415(c) limits may come into play, depending on the employer contribution to the 403(b) plan.

NOTE: This feature is to provide general information only, does not constitute legal advice and cannot be used or substituted for legal or tax advice.

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