The 457 Deferral Limit is a similar restriction, applied to certain government plans (457 plans). In calculating certain nondiscrimination tests (such as the Actual Deferral Percentage), all participant compensation is limited to this amount, for purposes of the calculation. This limit is also imposed in determining the Annual Benefit Limit (above). In calculating contribution allocations, a plan cannot consider any employee compensation in excess of the Annual Compensation Limit (401(a)(17)). ![]() This limit is actually expressed as the lessor of the dollar limit or 100% of the participant’s compensation, applied to the combination of employee contributions, employer contributions and forfeitures allocated to a participant’s account. The Annual Contribution Limit is the maximum annual contribution amount that can be made to a participant’s account (IRC section 415). The participant compensation level is also subjected to the Annual Compensation Limit noted below. The limit applied is actually the lessor of the dollar limit above or 100% of the participant’s average compensation (generally the high three consecutive years of service). ![]() The Annual Benefit Limit is the maximum annual benefit that can be paid to a participant (IRC section 415). Some still refer to this as the $7,000 limit (its original setting in 1987). ![]() The Elective Deferral Limit is the maximum contribution that can be made on a pre-tax basis to a 401(k) or 403(b) plan (Internal Revenue Code section 402(g)(1)).
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