How Much You Can Contribute to Your 403(b) Plan Each Year

Your 403(b) contribution limit depends on your age and employer

The IRS sets an annual limit on how much you can put into a 403(b) plan from your paycheck. For 2024, that limit is $23,500 if you are under 50. If you are 50 or older, you can contribute an additional $7,500 in catch-up contributions, bringing your total to $31,000. These limits change each year, and the IRS announces the new figure in October for the following year.

Your employer may also allow you to contribute more through a special provision called the 15-year rule, which applies only to 403(b) plans (not 401(k)s). This rule lets you contribute up to $3,000 extra per year if you have worked at the same employer for at least 15 years and have not already used this catch-up in prior years. The total amount you can ever contribute under this rule is $15,000 over your lifetime.

The money you contribute comes directly from your paycheck before taxes are taken out, which lowers your taxable income for the year. Your employer may also match a portion of your contributions, though this is less common in 403(b) plans than in 401(k)s. Any match your employer makes does not count against your personal contribution limit.

Key Takeaways

• The standard 403(b) contribution limit for 2024 is $23,500 per year, or $31,000 if you are 50 or older and use catch-up contributions.
• Contributions reduce your taxable income in the year you make them because the money is deducted before federal income tax is calculated.
• The 15-year rule allows certain 403(b) participants to contribute an extra $3,000 per year (up to $15,000 lifetime) if they meet specific tenure and prior-use requirements.
• Your employer's matching contributions, if offered, do not count toward your personal contribution limit and are a separate benefit.
• Contribution limits change annually, so you should check the IRS announcement each October to see the new limit for the following year.

How contributions are taken from your paycheck

When you enroll in your 403(b) plan, you tell your employer what percentage of each paycheck to send to the plan. If you are paid biweekly and earn $2,000 per paycheck, you might direct 10 percent ($200) to your 403(b). That $200 is deducted before your employer calculates federal income tax withholding, Social Security tax, and Medicare tax.

You can change your contribution amount at any time during the year, though most employers require you to make changes during an open enrollment period or within 30 days of a life event (marriage, birth, job change, significant change in income). Your plan administrator or HR department can tell you the exact deadlines for your employer.

If your employer offers a match, it is usually expressed as a percentage of what you contribute. For example, an employer might match 50 cents for every dollar you contribute, up to 6 percent of your salary. If you contribute 6 percent and your salary is $50,000, your employer would add $1,500 to your account that year. This match is assistance programs and does not reduce the amount you can contribute yourself.

The 15-year rule for long-term employees

If you have worked at the same employer for at least 15 years and your 403(b) plan allows it, you may be able to contribute an extra $3,000 per year beyond the standard limit. This is called the 15-year catch-up provision, and it is unique to 403(b) plans. You cannot use this rule if you have already contributed the maximum amount allowed under it in any prior year.

The lifetime cap on 15-year catch-up contributions is $15,000. Once you reach that total, you cannot use this provision again, even if you continue working at the same employer. For example, if you contribute an extra $3,000 in 2024 and $3,000 in 2025, you have used $6,000 of your $15,000 lifetime allowance and can contribute up to $9,000 more in future years.

Not all 403(b) plans offer this provision, so you will need to check your plan documents or ask your HR department whether it is available to you. If it is available and you want to use it, you must make an affirmative election — it does not happen automatically.

What happens if you contribute too much

If you accidentally contribute more than the IRS limit in a single year, the excess amount and any earnings on it must be removed from your account. This is called a corrective distribution. Your plan administrator will calculate how much to withdraw and send it to you, usually by April 15 of the following year.

When you receive a corrective distribution, the excess contribution is taxed as ordinary income in the year you made it (not the year you withdraw it), and you may owe a 10 percent penalty if you are under 59½. The earnings on the excess are taxed in the year of the distribution. To avoid this situation, keep track of your contributions throughout the year, especially if you have changed jobs and have multiple 403(b) accounts.

If you work for more than one employer and have 403(b) plans at each one, your contributions to all plans combined cannot exceed the annual limit. For example, if you contribute $15,000 to one employer's plan and $10,000 to another, you have reached the $25,000 limit (assuming you are under 50 and it is 2024). You are responsible for tracking this across employers; the plans do not automatically communicate with each other.

Contribution limits when you change jobs

If you leave an employer before the end of the year, your contribution limit for that year does not change. You can still contribute up to the annual maximum across all your 403(b) accounts combined. However, you can only contribute to a plan while you are employed by that employer, so once you leave, you cannot make further contributions to that plan.

If you move to a new employer with a 403(b) plan, you can start contributing to the new plan immediately. Your contributions to the old plan and the new plan must add up to the annual limit. For example, if you contributed $10,000 to your first employer's plan before leaving in June 2024, you can contribute up to $13,500 to your new employer's plan for the rest of 2024 (assuming the standard $23,500 limit).

When you leave an employer, you have options for what to do with the money already in your 403(b) account: you can leave it there, roll it over to an IRA, or roll it over to your new employer's plan if that plan accepts rollovers. A rollover does not count as a new contribution and does not affect your contribution limit for the current year.

Roth contributions and contribution limits

Some 403(b) plans offer a Roth option, which lets you contribute after-tax dollars instead of pre-tax dollars. Money you contribute to a Roth 403(b) does not reduce your taxable income in the year you contribute it, but withdrawals in retirement are tax-free (as long as you meet certain conditions). The annual contribution limit applies to Roth contributions the same way it applies to traditional contributions.

If your plan offers both traditional and Roth options, your combined contributions to both cannot exceed the annual limit. For example, you cannot contribute $15,000 to a traditional 403(b) and $15,000 to a Roth 403(b) in the same year; your total across both must stay at or below $23,500 (or $31,000 if you are 50 or older). You decide how to split your contributions between the two types.

Employer matches are always made to the traditional side of the plan, even if you contribute to the Roth side. The match itself is not taxed as income to you when it is deposited, but it will be taxed as ordinary income when you withdraw it in retirement.

How to track your contributions throughout the year

Your plan administrator sends you a statement at least once per year, usually in January or February, showing how much you contributed in the previous year. Many plans also offer online access where you can log in and see your current balance and year-to-date contributions at any time. Check this regularly, especially if you have multiple 403(b) accounts or if you changed jobs during the year.

If you are using the 15-year catch-up provision, keep a record of how much you have contributed under that rule each year so you do not accidentally exceed the $15,000 lifetime limit. Your plan administrator should track this for you, but it is wise to verify it yourself.

If you are approaching the annual limit late in the year and want to make sure you do not go over, contact your HR department or plan administrator. They can tell you exactly how much you have contributed so far and help you adjust your remaining paychecks to stay within the limit.

Frequently Asked Questions

Can I contribute to a 403(b) and a traditional IRA in the same year?

Yes, you can contribute to both. However, if you are covered by a 403(b) at work and your income is above certain thresholds, you may not be able to deduct your traditional IRA contributions on your tax return. The 403(b) contribution limit and the IRA contribution limit are separate, so you can max out both if you have the income to do so.

What if my employer does not offer a 403(b) plan?

If your employer does not sponsor a 403(b), you cannot contribute to one through that employer. You can open an individual IRA (traditional or Roth) on your own, which has a lower annual limit but is available to anyone with earned income. Some employers offer a SIMPLE IRA or SEP IRA as an alternative to a 403(b).

Do I have to contribute the maximum amount?

No. You can contribute any amount up to the limit, and you can change your contribution amount at any time. Many people contribute less than the maximum because they need the money for living expenses or have other financial priorities. Contributing something is better than contributing nothing, especially if your employer offers a match.

Can I make up a contribution I missed earlier in the year?

No. Contributions must come from your paycheck during the year you want to claim them. You cannot make a lump-sum contribution later to catch up on a missed amount. However, if you are 50 or older, you can use catch-up contributions in future years to contribute more than the standard limit.

What happens to my contributions if I am laid off?

Your contributions stay in your 403(b) account and belong to you. You cannot make new contributions once you are no longer employed by that employer, but the money already there remains invested and continues to grow. You can leave it in the plan, roll it to an IRA, or roll it to a new employer's plan if you find another job.