What's the 403(b) Maximum Contribution?

Employees of nonprofit organizations, schools and churches can defer up to $20,500 per year into their 403(b) plan. They may also be eligible for employer contributions and certain catch-up contributions.

Written by Erin Gobler / July 14, 2022

Quick Bites

  • A 403(b) plan is a workplace retirement plan that allows the employees of nonprofit organizations, schools and churches to invest for retirement in a tax-advantaged way.
  • In 2022, workers can contribute up to $20,500 of their income to a 403(b) plan, with an additional $6,500 allowed for workers 50 and older.
  • Employers can also contribute to their employees’ 403(b) plans for a combined contribution limit of $61,000.
  • 403(b) contribution limits are the same as 401(k) contribution limits but are considerably higher than the limits set for IRAs.

Most people are familiar with the 401(k), which is a workplace retirement plan that’s available to many employees. But what about the 403(b)? These plans aren’t quite as common since they’re only available to certain employees. But they have many of the same benefits as a 401(k).

Like other retirement plans, there’s a limit to how much an employee can contribute to their 403(b) account each year. Keep reading to learn how 403(b)s work, their contribution limits for 2022 and how they differ from other types of retirement plans.

Inside this article

  1. How does a 403(b) work?
  2. 403(b) contribution limits
  3. Contribution limit comparisons
  4. FAQ

How does a 403(b) work?

A 403(b) plan—also known as a tax-sheltered annuity—is an employer-sponsored retirement plan that’s offered by nonprofit organizations, churches and public schools. These plans allow employees to save for retirement in a tax-advantaged way.[1]

403(b) plans are established by employers on behalf of their employees. Each year, employees can contribute a certain percentage of their salaries. Those funds can then be invested in annuity contracts through insurance companies or in custodial accounts invested in mutual funds.[2]

403(b) vs. 401(k)

403(b) vs. 401(k)

Both allow you to save for retirement, but there are differences you should know about.

Find out more

There are generally two different types of 403(b) plans. With a traditional 403(b), employees contribute pre-tax money to the plan. The money grows tax-deferred in the account, and withdrawals are subject to ordinary income taxes during retirement.

With a Roth 403(b), contributions are made after-tax, meaning they won’t save employees money in the current year. However, employees then never have to pay taxes on those funds again. The money grows tax-free in the account and can be withdrawn tax-free during retirement.[3]

What are the current 403(b) contribution limits?

Each year there is a contribution limit set for 403(b) plans and other retirement plans.

“The 403(b) contribution limits are set by the Federal Government,” says Herman Thompson, a Certified Financial Planner with Innovative Financial Group. “The IRS has steadily increased the contribution limits since 1986 to reflect the increase in the cost of living.”

The more money that’s contributed to pre-tax retirement plans, the less money that’s available to create tax revenue for the federal and state governments. Additionally, these caps help to ensure that high-income workers don’t get significantly more benefit from these plans than the average worker.

Elective deferrals

In 2022, employees can contribute up to $20,500 per year to their 403(b) plan, up from $19,500 the previous year. Spread out across the year, an employee could reach this limit by contributing about $1,708.33 each month to their retirement plan.[4]

It’s important to note that 403(b) contribution limits are applied to the investor, not the plan.

“This is important to remember if you change jobs and are looking to maximize your contributions,” Thompson says. “You are still beholden to the total contribution limit for the year.”

Catch-up contributions

The IRS also sets a catch-up contribution, which is an additional amount that workers 50 and over can contribute to their 403(b) plans as a way to catch up on their retirement savings. In 2022, the catch-up contribution for workers 50 and over is $6,500.

403(b) plans also have catch-up contributions in addition to those offered by other plans. With this type of plan, an employer can allow an employee with at least 15 years of service to contribute more to their plan. This catch-up contribution can be the lesser of:

  • $3,000

  • $15,000 minus the employee’s additional elective deferrals in previous years under this rule

  • $5,000 times the number of years of service minus the total elective deferrals made in previous years[4]

Employer matching

The limits we listed above only apply to contributions from employees. Employers also have the option of contributing to their employees’ accounts. Many employers do this in the form of matching contributions, where they agree to match their workers’ contributions up to a certain percentage of their salaries. However, employers can contribute to their employees’ accounts regardless of whether the worker themselves contributes.

In 2022, the maximum combined contribution for both employee and employee salaries is $61,000. However, the amount contributed can’t exceed 100% of an employee’s compensation for the year.[4]

Historical limits

As we mentioned, the IRS increases the 403(b) contribution limit periodically to keep pace with inflation. The chart below shows the contribution limits dating back to 2012.

YearElective Deferral LimitCombined Employer/Employee LimitCatch-Up Contribution Limit
2022$20,500$61,000$6,500
2021$19,500$58,000$6,500
2020$19,500$57,000$6,500
2019$19,000$56,000$6,000
2018$18,500$55,000$6,000
2017$18,000$54,000$6,000
2016$18,000$53,000$6,000
2015$18,000$53,000$6,000
2014$17,500$52,000$5,500
2013$17,500$51,000$5,500
2012$17,000$50,000$5,500

403(b) vs. 401(k) vs. IRA contribution limits

403(b) plans aren’t the only retirement plans that have an annual contribution limit. Other plans, such as 401(k) plans and IRAs, also limit the amount workers can contribute.

401(k) plans are regulated by many of the same rules as 403(b) plans. As a result, they have identical contribution limits. The only difference is that 401(k) plans don’t have the provision that allows an additional catch-up contribution for employees with at least 15 years of service.

What Is the Maximum Roth IRA Contribution Limit?

What Is the Maximum Roth IRA Contribution Limit?

Contributing to a Roth IRA is a great way to save for retirement, but there are limits in place surrounding how much you can contribute each year.

Find out more

Not only do 403(b) and 401(b) plans have the same limit, but the limit applies to both plans for a single employee. For example, if you have access to both a 401(k) and a 403(b), you can only contribute up to $20,500 for both plans combined. If you contribute $20,500 to your 403(b) plan, you won’t be able to contribute to your 401(k) plan at all.[4]

Individual retirement plans (IRAs) have contribution limits that are considerably lower. These plans aren’t offered by employers. Instead, they are opened and managed by individuals directly with brokerage firms. In 2022, the IRS allows workers to contribute up to $6,000 or 100% of their income. There’s an additional catch-up contribution for workers 50 and older.[5]

What are the 401(k) Contribution Limits for 2022?

What are the 401(k) Contribution Limits for 2022?

The contribution limit is higher for 2022. Here’s what to know about growing your retirement savings in a 401(k).

Find out more

FAQ

What is the maximum 403(b) contribution for someone over 50?

The maximum 403(b) for employees over age 50 is $26,000 in 2022. When combined with the allowed employer contributions, the maximum total is $67,500.

Should I max out my 403(b)?

Whether you should max out your 403(b) depends on your financial situation. Being able to max out your plan—meaning contributing the full $20,500 per year—will help set you up for a comfortable retirement. However, you may still be able to reach your retirement goals by contributing less.

Is a 403(b) better than a 401(k)?

Neither a 403(b) nor a 401(k) is necessarily better than one another. In fact, in many ways, the two plans are identical. The key difference is who offers them. 401(k) plans are offered by for-profit companies, while 403(b) plans are offered by nonprofit organizations, churches, and schools.

Article Sources
  1. “IRC 403(b) Tax-Sheltered Annuity Plans.” IRS. https://www.irs.gov/retirement-plans/irc-403b-tax-sheltered-annuity-plans.
  2. “Retirement Plans FAQs regarding 403(b) Tax-Sheltered Annuity Plans.” IRS. https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-403b-tax-sheltered-annuity-plans.
  3. “Retirement Plan FAQs on Designated Roth Accounts.” IRS. https://www.irs.gov/retirement-plans/retirement-plans-faqs-on-designated-roth-accounts.
  4. “Retirement Topics - 403(b) Contribution Limits.” IRS. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-403b-contribution-limits.
  5. “Retirement Topics - IRA Contribution Limits.” IRS. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-403b-contribution-limits.

About the Author

Erin Gobler

Erin Gobler

Erin is a personal finance expert and journalist who has been writing online for nearly a decade. Erin’s work has appeared in major financial publications, including Fox Business, Time, Credit Karma, and more.

Full bio

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