What Are the 403(b) Contribution Limits for 2024?

A 403(b) plan is a tax-advantaged retirement account for employees of public schools, certain non-profits, and some religious organizations. Contributions grow tax-deferred or tax-free, depending on whether they are made pre-tax or through a Roth option.

Each year, the IRS sets contribution limits, adjusting for inflation. Understanding these limits helps employees maximize savings and avoid penalties.

Maximum Contribution Thresholds

For 2024, the IRS raised the annual contribution limit for 403(b) plans to $23,000, up from $22,500 in 2023. This cap applies to elective deferrals—amounts employees contribute from their salary on a pre-tax or Roth basis.

The total contribution limit, which includes both employee deferrals and employer contributions, is $69,000 for 2024. This figure, governed by Section 415(c) of the Internal Revenue Code, includes all contributions made to the plan, such as after-tax voluntary contributions, but excludes catch-up contributions.

These limits apply per employer, meaning individuals working for multiple qualifying employers may contribute the maximum at each job, provided they do not exceed the overall cap. This is especially relevant for employees working for multiple school districts or non-profits.

Catch-Up Provisions

Employees aged 50 and older can contribute an additional $7,500 in 2024, bringing their total possible employee deferral to $30,500.

Additionally, long-term employees with at least 15 years of service with the same eligible employer may qualify for an extra $3,000 per year, up to a lifetime cap of $15,000. Eligibility depends on prior contributions to ensure individuals have not already maximized their allowable deferrals under this rule.

Employer Contributions

Organizations offering 403(b) plans can contribute on behalf of employees through matching or non-elective contributions. Matching contributions are typically based on employee deferrals, such as an employer matching 50% of an employee’s contributions up to 5% of their salary. Non-elective contributions are made regardless of whether the employee contributes.

Employer contributions must comply with the overall plan cap set by Section 415(c) of the Internal Revenue Code. These contributions are not subject to FICA taxes, providing payroll tax savings for both employers and employees.

Vesting schedules determine when employees gain full ownership of employer contributions. Some organizations offer immediate vesting, while others use graded or cliff vesting, requiring employees to complete a certain number of years of service before fully owning the funds. Employers use vesting rules to encourage staff retention while managing financial commitments.

Plan Aggregation Rules

Employees participating in multiple retirement plans must ensure their total elective deferrals comply with IRS aggregation rules. While 403(b) plans operate under their own regulations, individuals contributing to both a 403(b) and a 401(k) or SIMPLE IRA cannot exceed the annual elective deferral limit set under Section 402(g) of the Internal Revenue Code. If a participant maxes out a 401(k), they cannot contribute additional elective deferrals into a 403(b) beyond the limit for the year.

However, 403(b) plans are treated differently when calculating total contributions under Section 415(c). Unlike other defined contribution plans, 403(b) accounts are considered separate for employer contributions, allowing employees with multiple jobs to receive contributions from each employer without violating the overall cap. This distinction benefits educators and healthcare professionals working for multiple qualifying institutions, enabling them to maximize employer-funded contributions.