What Are the 403(b) Maximum Contribution Limits?

A 403(b) plan is a retirement savings vehicle available to employees of public schools, certain non-profit organizations, and ministers. These plans, often called tax-sheltered annuities, allow eligible employees to save for retirement on a tax-advantaged basis. Contributions and earnings can grow tax-deferred until the money is withdrawn during retirement. The Internal Revenue Service (IRS) sets annual limits on how much can be contributed to these accounts.

Employee Contribution Limits

The limit on an employee’s elective deferrals is $23,500. This cap applies to the total of both pre-tax and any designated Roth contributions an employee makes. It is an individual limit that applies across all plans an employee might participate in, such as a 401(k), except for 457(b) plans.

Employees who are age 50 or over at any point during the calendar year are permitted to contribute an additional $7,500. Beginning in 2025, a new provision allows employees aged 60, 61, 62, and 63 to make a higher catch-up contribution of $11,250, if the plan allows it. This brings the total potential employee contribution to $31,000 for an individual age 50-59 or 64 and over, and $34,750 for an individual age 60-63. These catch-up provisions are not automatic and must be permitted by the terms of the 403(b) plan document.

The 15-Year Service Catch-Up Contribution

A feature available in some 403(b) plans is a catch-up contribution for long-tenured employees. To be eligible, an employee must have completed at least 15 years of service with their current employer, which must be a qualified organization such as a public school system or hospital. The years of service do not need to be consecutive but must be with the same organization. The allowable amount is the lesser of three distinct figures: an annual cap of $3,000; a lifetime limit of $15,000, reduced by prior use of this catch-up; and a formula of $5,000 multiplied by years of service, minus total prior elective deferrals.

For example, an employee with 16 years of service and $76,000 in prior contributions would calculate the third limit as ($5,000 x 16) – $76,000 = $4,000. Their maximum catch-up would be the lesser of the three limits, which is $3,000. If an employee is eligible for both the 15-year service catch-up and an age-based catch-up, contributions above the standard $23,500 limit are first applied toward the 15-year service limit, and any remaining excess can be applied toward the age-based catch-up limit.

The Overall Contribution Limit

Beyond an employee’s own salary deferrals, a broader cap governs the total amount that can be added to a 403(b) account in a single year. This overall limit includes the employee’s elective deferrals, all employer contributions, and any 15-year service catch-up contributions. For 2025, this total annual additions limit is the lesser of 100% of the employee’s compensation or $70,000.

For example, if an employee under age 50 contributes the maximum $23,500, the employer can contribute up to an additional $46,500, provided the total does not exceed the employee’s compensation. The age 50+ and age 60-63 catch-up contributions are excluded from this overall limit. If an employee’s and employer’s contributions reach the $70,000 annual additions limit, the employee could still contribute their age-based catch-up on top of that, if the plan allows it.

Correcting Excess Contributions

Contributing more than the annual elective deferral limit, known as an excess deferral, can lead to negative tax consequences if not handled properly. An over-contribution can occur if an employee changes jobs mid-year and contributes to 403(b) plans at both employers, exceeding the personal limit. The responsibility for monitoring this individual limit rests with the employee. To fix an excess deferral, the participant must notify their plan administrator and request a distribution of the excess amount, plus any earnings.

This corrective distribution must be completed by the April 15 tax filing deadline for the year the contribution was made. When corrected in a timely manner, the excess deferral amount is included in the employee’s gross income for the year it was contributed, while the associated earnings are taxable in the year they are distributed. Failing to correct an excess deferral by the deadline results in double taxation, as the excess amount is taxed in the year it was contributed and again when it is eventually distributed. The corrective distribution must be reported on Form 1099-R, and a timely correction avoids a 10% early distribution tax and other penalties.