Contributions

<div class="Section1"><br /> <br /> The safe harbor rules for automatic contribution plans with respect to 401(k) plans also apply with respect to matching contributions under a 403(b) annuity through the application of IRC Section 403(b)(12) ( Q <a href="javascript:void(0)" class="accordion-cross-reference" id="3762">3762</a>). This provision is effective for years beginning after<br /> December&nbsp;31, 2007.<a href="#_ftn1" name="_ftnref1">¹</a><br /> <br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp; IRC &sect;&sect;&nbsp;401(k)(13), 401(m)(12), 414(w).<br /> <br /> </div></div><br />

<div class="Section1"><br /> <br /> Under the final regulations, a plan-to-plan transfer from a 403(b) plan to another 403(b) plan is permitted if each of the following conditions is met:<br /> <p style="padding-left: 40px;">(1)  the participant is an employee or former employee of the employer for the receiving plan or, in the case of a transfer for a beneficiary of a deceased participant, the participant was an employee or former employee of the employer for the receiving plan;</p><br /> <p style="padding-left: 40px;">(2)  the transferring plan provides for transfers;</p><br /> <p style="padding-left: 40px;">(3)  the receiving plan provides for the receipt of transfers;</p><br /> <p style="padding-left: 40px;">(4)  the participant or beneficiary whose assets are being transferred has an accumulated benefit immediately after the transfer that is at least equal to the accumulated benefit immediately before the transfer;</p><br /> <p style="padding-left: 40px;">(5)  the receiving plan imposes restrictions on distributions to the participant or beneficiary whose assets are being transferred that are no less stringent than those imposed on the transferring plan; and</p><br /> <p style="padding-left: 40px;">(6)  if a plan-to-plan transfer does not constitute a complete transfer of the participant’s or beneficiary’s interest in the 403(b) plan, the receiving plan treats the amount transferred as a continuation of a pro rata portion of the participant’s or beneficiary’s interest in the Section 403(b) plan (e.g., a pro rata portion of the participant’s or beneficiary’s interest in any after-tax employee contributions).<a href="#_ftn1" name="_ftnref1">¹</a></p><br /> <br /> <br /> <hr /><br /> <br /> <strong>Planning Point:</strong> No transfers are permitted between contracts that are not part of a plan under Revenue Procedure 2007-71, because the 2007 regulations revoked Revenue Ruling 90-24 which had previously permitted such transfers.<br /> <br /> <hr /><br /> <br /> </div><br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%" /><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.  Treas. Reg. § 1.403(b)-10(b)(3).<br /> <br /> </div>

<div class="Section1"><br /> <br /> Contributions to a 403(b) plan generally do not need to be aggregated with other 401(a) defined contribution plans of the employer in computing the Section 415 limitation. If a person participates in a 401(a) defined contribution plan and also participates in a 403(b) plan of another employer, contributions to both plans must be aggregated for 415 purposes if that participant is in control of either employer.<br /> <br /> In applying the IRC Section 415 limit to a combination of a 403(b) annuity and a defined contribution plan of an individual controlled by the employer, each plan separately must meet the limit applicable to it taking into consideration only the compensation from the employer providing the plan. In determining the combined limit, compensation from the controlled employer may be aggregated with that from the employer providing the annuity.<a href="#_ftn1" name="_ftnref1">¹</a><br /> <br /> </div><br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%" /><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.  IRC § 415(f).<br /> <br /> </div>

<div class="Section1"><br /> <br /> The amount of elective deferrals that an individual can exclude from income for a tax year is limited. Elective deferrals are:<br /> <p style="padding-left: 40px;">(1)&nbsp; amounts contributed to tax sheltered annuity plans under salary reduction agreements;</p><br /> <p style="padding-left: 40px;">(2)&nbsp; amounts contributed under cash or deferred arrangements to 401(k) plans ( Q <a href="javascript:void(0)" class="accordion-cross-reference" id="3751">3751</a>) and salary reduction SEPs (&ldquo;SAR-SEPs&rdquo;) ( Q <a href="javascript:void(0)" class="accordion-cross-reference" id="3705">3705</a>); and</p><br /> <p style="padding-left: 40px;">(3)&nbsp; amounts contributed under salary reductions to SIMPLE IRAs ( Q <a href="javascript:void(0)" class="accordion-cross-reference" id="3706">3706</a>).<a href="#_ftn1" name="_ftnref1">¹</a></p><br /> Elective deferrals do not include elective contributions made pursuant to a one-time irrevocable election that is made at initial eligibility to participate in the salary reduction agreement or pursuant to certain other one time irrevocable elections specified in regulations, or pre-tax contributions made as a condition of employment.<a href="#_ftn2" name="_ftnref2">²</a><br /> <br /> For 2020-2021, the aggregate limit on elective deferrals was $19,500, and the limit for 2022 is $20,500. The limit increased to $22,500 in 2023, $23,000 in 2024 and $23,500 in 2025 (projected).<a href="#_ftn3" name="_ftnref3">³</a> The elective deferral limit is indexed for inflation in increments of $500.<a href="#_ftn4" name="_ftnref4">⁴</a><br /> <br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp; IRC &sect;&nbsp;402(g).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.&nbsp; IRC &sect;&nbsp;402(g)(3).<br /> <br /> <a href="#_ftnref3" name="_ftn3">3</a>.&nbsp; IRC &sect;&nbsp;402(g)(1); Notice 2017-64, Notice 2018-83, Notice 2019-59, Notice 2020-79, Notice 2021-61, Notice 2022-55, Notice 2023-75.<br /> <br /> <a href="#_ftnref4" name="_ftn4">4</a>.&nbsp; IRC &sect;&nbsp;402(g)(4).<br /> <br /> </div></div><br />

<div class="Section1"><br /> <br /> There are several different limitations applicable to amounts contributed to 403(b) annuities. Contributions that exceed any of these particular limits may be thought of as excess contributions, but they are treated differently depending on the limit that is exceeded and, sometimes, depending on whether the excess amount is contributed to a custodial account or toward the purchase of an annuity contract.<br /> <br /> When contributions that exceed the lesser of the excludable amount or the overall limit are made to a custodial account for the purchase of regulated investment company stock or a retirement income account to the extent funded through custodial accounts, they are properly called excess contributions and are subject to an excise tax.<a href="#_ftn1" name="_ftnref1">¹</a> The tax is 6 percent (not to exceed 6 percent of the value of the account) of the following: (1) the amount by which the contributions, other than a permissible rollover contribution ( Q <a href="javascript:void(0)" class="accordion-cross-reference" id="4007">4007</a>), exceed the lesser of the amount excludable from gross income under IRC Section&nbsp;403(b) or the overall limitation under IRC Section&nbsp;415, or whichever is applicable if only one is applicable, plus (2) any excess carried over from the preceding tax year. An excess carried over from a previous year may be reduced by contributing in a year less than the excludable amount or the contribution limit, whichever is lower. An excess also may be reduced by taxable distributions.<a href="#_ftn2" name="_ftnref2">²</a> The tax is imposed on the employee.<br /> <br /> If contributions are made toward the purchase of an annuity contract, the excess is not subject to an excise tax.<br /> <br /> For contributions in excess of the overall limit of IRC Section&nbsp;415, <em><em>see</em></em> Q <a href="javascript:void(0)" class="accordion-cross-reference" id="4046">4046</a>.<br /> <br /> Where salary reduction contributions are in excess of the limit on elective deferrals, the amount above the limit is not excludable from income when contributed and, if not timely distributed, is included in gross income for a second time when later distributed ( Q <a href="javascript:void(0)" class="accordion-cross-reference" id="4047">4047</a>, Q <a href="javascript:void(0)" class="accordion-cross-reference" id="4042">4042</a>).<br /> <br /> Discriminatory Matching Employer Contributions. If an employer makes certain discriminatory matching contributions toward an annuity contract or to a custodial account, amounts in excess of nondiscriminatory amounts are called excess aggregate contributions and are subject to a 10 percent excise tax if not timely distributed ( Q <a href="javascript:void(0)" class="accordion-cross-reference" id="3808">3808</a>).<a href="#_ftn3" name="_ftnref3">³</a><br /> <br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp; IRC &sect;&nbsp;4973(c).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.&nbsp; IRC &sect;&nbsp;4973(c).<br /> <br /> <a href="#_ftnref3" name="_ftn3">3</a>.&nbsp; IRC &sect;&nbsp;4979.<br /> <br /> </div></div><br />

<div class="Section1"><br /> <br /> Under the final 403(b) regulations, a non-taxable exchange or transfer is permitted for a 403(b) contract if it:<br /> <p style="padding-left: 40px;">(1)&nbsp; is a mere change of investment within the same plan, that is, a contract exchange;</p><br /> <p style="padding-left: 40px;">(2)&nbsp; constitutes a plan-to-plan transfer, so that there is another employer plan receiving the exchange (<em><em>see</em></em> Q <a href="javascript:void(0)" class="accordion-cross-reference" id="4058">4058</a>); or</p><br /> <p style="padding-left: 40px;">(3)&nbsp; it is a transfer to purchase permissive service credit ( Q <a href="javascript:void(0)" class="accordion-cross-reference" id="4060">4060</a>).<a href="#_ftn1" name="_ftnref1">¹</a></p><br /> Contract Exchanges within the Same Plan<br /> <br /> Under prior law, Revenue Ruling 90-24 provided that a direct transfer between issuers of an amount representing all or part of an individual&rsquo;s interest in an IRC Section&nbsp;403(b) annuity or custodial account was not a distribution subject to tax or to the premature distribution penalty provided that, after the transfer, the funds transferred continued to be subject to distribution requirements at least as strict as those applicable to them before the transfer.<a href="#_ftn2" name="_ftnref2">²</a> The final 403(b) regulations revoked Revenue Ruling 90-24 and any exchanges now are allowed under rules that generally are similar to those applicable to qualified plans.<a href="#_ftn3" name="_ftnref3">³</a><br /> <br /> The final regulations provide that a 403(b) contract of a participant or beneficiary may be exchanged for another 403(b) contract of that participant or beneficiary under the same 403(b) plan if each of the following conditions is satisfied:<br /> <p style="padding-left: 40px;">(1)&nbsp; the plan under which the contract is issued provides for the exchange;</p><br /> <p style="padding-left: 40px;">(2)&nbsp; the participant or beneficiary has an accumulated benefit immediately after the exchange that is at least equal to the accumulated benefit before the exchange, taking into account the accumulated benefit under both 403(b) contracts immediately before the exchange; and</p><br /> <p style="padding-left: 40px;">(3)&nbsp; the new contract is subject to distribution restrictions with respect to the participant that are no less stringent than those imposed on the contract being exchanged and the employer enters into an information sharing agreement with the issuer of the new contract.<a href="#_ftn4" name="_ftnref4">⁴</a></p><br /> Under the information sharing agreement, the employer and the issuer agree that from time to time in the future they will provide each other with the following information:<br /> <p style="padding-left: 40px;">(1)&nbsp; information about the participant&rsquo;s employment;</p><br /> <p style="padding-left: 40px;">(2)&nbsp; information that takes into account other 403(b) contracts or qualified employer plans, such as whether a severance from employment has occurred for purposes of the distribution restrictions and whether the hardship withdrawal rules are satisfied; and</p><br /> <p style="padding-left: 40px;">(3)&nbsp; information necessary for the resulting contract to satisfy other tax requirements, such as whether a plan loan satisfies the conditions so that the loan is not a deemed distribution under IRC Section&nbsp;72(p)(1).<a href="#_ftn5" name="_ftnref5">⁵</a></p><br /> The rule for contracts received in an exchange does not apply to a contract received in an exchange that occurred on or before September&nbsp;24, 2007, if the exchange (including the contract received in the exchange) satisfied the rules applicable at the time of the<br /> exchange.<a href="#_ftn6" name="_ftnref6">⁶</a><br /> <br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp; Preamble, T.D. 9340, 72 Fed. Reg. 41128, 41131 (7-26-2007); Treas. Reg. &sect;&nbsp;1.403(b)-10(b).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.&nbsp; Rev. Rul. 90-24, 1990-1 CB 97.<br /> <br /> <a href="#_ftnref3" name="_ftn3">3</a>.&nbsp; Preamble, T.D. 9340, 72 Fed. Reg. 41128, 41131 (July&nbsp;26, 2007).<br /> <br /> <a href="#_ftnref4" name="_ftn4">4</a>.&nbsp; Treas. Reg. &sect;&nbsp;1.403(b)-10(b)(2).<br /> <br /> <a href="#_ftnref5" name="_ftn5">5</a>.&nbsp; Treas. Reg. &sect;&nbsp;1.403(b)-10(b)(2).<br /> <br /> <a href="#_ftnref6" name="_ftn6">6</a>.&nbsp; Treas. Reg. &sect;&nbsp;1.403(b)-11(g).<br /> <br /> </div></div><br />

<div class="Section1"><br /> <br /> In the case of a 403(b) annuity contract, &ldquo;participant&rsquo;s compensation&rdquo; means the participant&rsquo;s includable compensation determined under IRC Section&nbsp;403(b)(3).<a href="#_ftn1" name="_ftnref1">¹</a> Includable compensation is based on compensation earned by the employee for the most recent period, ending not later than the close of the taxable year for which the limitation is being determined, that constitutes a full year of service and that precedes the taxable year by no more than five years.<a href="#_ftn2" name="_ftnref2">²</a><br /> <br /> Thus, for a full-time employee, includable compensation generally is the employee&rsquo;s salary for the current taxable year. For a part-time employee, fractional year earnings are required to be aggregated.<a href="#_ftn3" name="_ftnref3">³</a> To illustrate, assume that as of the end of 2024, an employee had worked three years half-time and had the following earnings: $11,500 in 2022, $12,000 in 2023, and $12,500 in 2024. In computing the employee&rsquo;s exclusion allowance for 2024, the employee&rsquo;s includable compensation would be $24,500 ($12,000 + $12,500).<br /> <br /> The definition of includable compensation includes any elective deferrals ( Q <a href="javascript:void(0)" class="accordion-cross-reference" id="4047">4047</a>) made to the plan and any amount that has been contributed or deferred by the employer at the election of the employee and that is not includable in gross income by reason of IRC Section&nbsp;125, IRC Section&nbsp;132(f)(4), or IRC Section&nbsp;457 (<em><em>see</em> </em> Q <a href="javascript:void(0)" class="accordion-cross-reference" id="3501">3501</a> concerning cafeteria plans and Q <a href="javascript:void(0)" class="accordion-cross-reference" id="3581">3581</a> concerning IRC Section&nbsp;457 deferred compensation plans).<a href="#_ftn4" name="_ftnref4">⁴</a><br /> <br /> Only compensation from an employer that made the contribution can be included; compensation from any other employer or any other source cannot be included. The employer is generally the common law employer.<br /> <br /> For purposes of determining the limits on contributions under IRC Section&nbsp;415(c), amounts paid to a minister as a tax-free housing allowance may not be treated as compensation under the general or alternative definitions of compensation under the regulations.<a href="#_ftn5" name="_ftnref5">⁵</a><br /> <br /> Certain payments made after an employee&rsquo;s severance from employment will not fail to be compensation within the meaning of IRS Section&nbsp;415(c) if the compensation is paid by the later of 2&frac12; months after severance from employment with the employer maintaining the plan or the end of the limitations year that includes the date of severance from employment with the employer maintaining the plan.<a href="#_ftn6" name="_ftnref6">⁶</a><br /> <br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp; IRC &sect;&nbsp;415(c)(3)(E).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.&nbsp; IRC &sect;&nbsp;403(b)(3).<br /> <br /> <a href="#_ftnref3" name="_ftn3">3</a>.&nbsp; IRC &sect;&nbsp;403(b)(4)(B).<br /> <br /> <a href="#_ftnref4" name="_ftn4">4</a>.&nbsp; IRC &sect;&nbsp;403(b)(3).<br /> <br /> <a href="#_ftnref5" name="_ftn5">5</a>.&nbsp; Let. Rul. 200135045.<br /> <br /> <a href="#_ftnref6" name="_ftn6">6</a>.&nbsp; Treas. Reg. &sect;&sect;&nbsp;1.415(c)-2(e)(3)(ii), 1.403(b)-3(b)(4)(ii).<br /> <br /> </div></div><br />

<div class="Section1"><br /> <br /> 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.<a href="#_ftn1" name="_ftnref1">¹</a><br /> <br /> The limit for any one year is increased by the lesser of the following:<br /> <p style="padding-left: 40px;">(1)&nbsp; $3,000;</p><br /> <p style="padding-left: 40px;">(2)&nbsp; $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</p><br /> <p style="padding-left: 40px;">(3)&nbsp; 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.<a href="#_ftn2" name="_ftnref2">²</a></p><br /> The current limit ($23,500 in 2025 (projected)) is the amount subject to increase by the above amount.<a href="#_ftn3" name="_ftnref3">³</a><br /> <br /> 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.<a href="#_ftn4" name="_ftnref4">⁴</a> For the rule coordinating the 15 years of service catch-up with the age 50 catch-up, <em><em>see</em> </em> Q <a href="javascript:void(0)" class="accordion-cross-reference" id="4050">4050</a>.<br /> <br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp; Treas. Reg. &sect;&nbsp;1.403(b)-4(c)(3). See, e.g., Let. Rul. 200934012.<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.&nbsp; IRC &sect;&nbsp;402(g)(7). <em><em>See also</em></em> IRS Publication 571, Tax Sheltered Annuity Plans (January&nbsp;2019).<br /> <br /> <a href="#_ftnref3" name="_ftn3">3</a>.&nbsp; Notice 2023-75.<br /> <br /> <a href="#_ftnref4" name="_ftn4">4</a>.&nbsp; Treas. Reg. &sect;&nbsp;1.403(b)-4(c)(3)(iii). <em><em>See</em></em> Let. Rul. 200934012 ($3,000 catch-up contribution permitted where the employee had worked for the same college for 24 years).<br /> <br /> </div></div><br />

<div class="Section1"><br /> <br /> The otherwise applicable dollar limit on elective deferrals under a Section&nbsp;403(b) annuity can be increased for individuals who attain age 50 by the end of the taxable year.<a href="#_ftn1" name="_ftnref1">¹</a> In 2023-2024, the applicable dollar amount is $7,500. In 2021 and 2022, the applicable dollar amount was $6,500.<a href="#_ftn2" name="_ftnref2">²</a> The limit is indexed for inflation in $500 increments.<a href="#_ftn3" name="_ftnref3">³</a><br /> <br /> Catch-up contributions by participants age 50 or over made under the provisions of IRS Section&nbsp;414(v) are not subject to the elective deferral limit.<a href="#_ftn4" name="_ftnref4">⁴</a> The elective deferral limit of $23,500 in 2025 (projected) is increased by the special catch-up limit under IRC Section 402(g)(7) and by the catch-up limit under Treasury Regulation Section 1.414(v)-1(c)(2).<a href="#_ftn5" name="_ftnref5">⁵</a><br /> <br /> According to final 403(b) regulations, any catch-up amount contributed by an employee who is eligible for both an age 50 catch-up and the special 403(b) catch-up for certain organizations is treated first as an amount contributed as a special 403(b) catch-up, to the extent that type of catch-up is permitted and second as an amount contributed as an age 50 catch-up to the extent the catch-up amount ( Q <a href="javascript:void(0)" class="accordion-cross-reference" id="3761">3761</a>) exceeds the maximum special 403(b) catch-up after taking into account IRC Sections 402(g) and 415(c), the special 403(b) catch-up, and any limits on the special 403(b) catch-up that are imposed by the terms of the plan.<a href="#_ftn6" name="_ftnref6">⁶</a><br /> <br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp; IRC &sect;&sect;&nbsp;414(v)(1), 414(v)(5).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.&nbsp; IRC &sect;&nbsp;414(v)(2)(B)(i); Notice 2020-79, Notice 2021-61, Notice 2022-55, Notice 2023-75<br /> <br /> <a href="#_ftnref3" name="_ftn3">3</a>.&nbsp; IRC &sect;&nbsp;414(v)(2)(B)(ii).<br /> <br /> <a href="#_ftnref4" name="_ftn4">4</a>.&nbsp; IRC &sect;&nbsp;414(v)(3)(A); Treas. Reg. &sect;&nbsp;1.414(v)-1(d).<br /> <br /> <a href="#_ftnref5" name="_ftn5">5</a>.&nbsp; Treas. Reg. &sect;&nbsp;1.402(g)-2(a).<br /> <br /> <a href="#_ftnref6" name="_ftn6">6</a>.&nbsp; Treas. Reg. &sect;&nbsp;1.403(b)-4(c)(3)(iv).<br /> <br /> </div></div><br />

<div class="Section1"><br /> <br /> A duly ordained, commissioned, or licensed minister of a church or a lay person who is an employee of a church or a convention or association of churches, including a tax-exempt organization controlled by or associated with a convention or association of churches, may be able to increase excludable tax sheltered annuity contributions under the special rules explained below.<br /> <br /> For these purposes, a duly ordained, commissioned, or licensed minister who is self-employed or who is employed by an organization other than one described in IRC Section&nbsp;501(c)(3), but with respect to which the minister shares common religious bonds, is considered a church employee.<a href="#_ftn1" name="_ftnref1">¹</a> This definition includes chaplains.<br /> <br /> A church employee may make an election that may provide a higher IRC Section&nbsp;415 annual additions limit than discussed in Q <a href="javascript:void(0)" class="accordion-cross-reference" id="4043">4043</a>. This employee may elect an annual addition limit of as much as $10,000 in any one year. Employer contributions under this election, that is, payments in excess of the otherwise applicable annual addition limit, may not aggregate more than $40,000 over the employee&rsquo;s lifetime.<a href="#_ftn2" name="_ftnref2">²</a><br /> <br /> A church employee with 15 years of service is eligible for the higher elective deferral limit explained in Q <a href="javascript:void(0)" class="accordion-cross-reference" id="4047">4047</a>.<br /> <br /> Contributions to a defined contribution program (a &ldquo;retirement income account&rdquo;) established or maintained by a church are considered contributions for a tax sheltered annuity contract. A program in existence on August&nbsp;13, 1982, will not fail to be a tax sheltered annuity merely because it is a defined benefit plan even if it is later amended or extended to other employees.<a href="#_ftn3" name="_ftnref3">³</a><br /> <br /> Retirement income accounts can be established for self-employed ministers and chaplains and ministers who are employed by an organization other than one described in IRC Section&nbsp;501(c)(3) but with respect to which the ministers share common religious bonds. The SECURE Act clarified that employees of a non-qualified church-controlled organization may be covered under a Section&nbsp;403(b) plan.<br /> <br /> The final 403(b) regulations clarify that retirement income accounts will be expected to be maintained pursuant to a plan that affirmatively states the intent to be a retirement income account.<a href="#_ftn4" name="_ftnref4">⁴</a><br /> <br /> Contributions made by a minister to a retirement income account after 2001 are allowed to the extent they do not exceed the limit on elective deferrals or the limit on annual additions.<a href="#_ftn5" name="_ftnref5">⁵</a><br /> <br /> A church plan does not have to meet the participation and nondiscrimination requirements applicable to other employer tax sheltered annuity plans ( Q <a href="javascript:void(0)" class="accordion-cross-reference" id="4038">4038</a>)<a href="#_ftn6" name="_ftnref6">⁶</a> if it meets certain requirements of being a church.<br /> <br /> In figuring the Section&nbsp;415 annual additions limit, a church employee must count all years of service with organizations that are part of a particular church as years of service with one employer. Similarly, the church employee must treat contributions by the churches as made by one employer.<a href="#_ftn7" name="_ftnref7">⁷</a> In the case of a foreign missionary, contributions and other additions for an annuity contract or retirement income contract, when expressed as an annual addition to the employee&rsquo;s account, are not treated as exceeding the IRC Section&nbsp;415 annual additions limit if the annual addition is not in excess of the greater of $3,000 or the employee&rsquo;s includable compensation under IRC Section&nbsp;403(b)(3).<a href="#_ftn8" name="_ftnref8">⁸</a><br /> <br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp; IRC &sect;&nbsp;414(e)(5).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.&nbsp; IRC &sect;&nbsp;415(c)(7).<br /> <br /> <a href="#_ftnref3" name="_ftn3">3</a>.&nbsp; IRC &sect;&nbsp;403(b)(9); Treas. Reg. &sect;&sect;&nbsp;1.403(b)-8(e), 1.403(b)-9(a)(1); TEFRA, &sect;&nbsp;251(e)(5); Let. Rul. 8837061.<br /> <br /> <a href="#_ftnref4" name="_ftn4">4</a>.&nbsp; Treas. Reg. &sect;&sect;&nbsp;1.403(b)-3(b)(3), 1.403(b)-9(a)(2)(ii).<br /> <br /> <a href="#_ftnref5" name="_ftn5">5</a>.&nbsp; IRC &sect;&sect;&nbsp;404(a)(10)(B), 414(e)(5).<br /> <br /> <a href="#_ftnref6" name="_ftn6">6</a>.&nbsp; IRC &sect;&nbsp;403(b)(1)(D); <em><em>see also</em></em> IRC &sect;&nbsp;403(b)(12)(B).<br /> <br /> <a href="#_ftnref7" name="_ftn7">7</a>.&nbsp; IRC &sect;&nbsp;415(c)(7)(B).<br /> <br /> <a href="#_ftnref8" name="_ftn8">8</a>.&nbsp; IRC &sect;&nbsp;415(c)(7)(C).<br /> <br /> </div></div><br />