[treading water]

I signed up for a 403b in the fall of 2007. I filled out a salary reduction form to get the most into the account that I could for 2007, around $9000. Starting Jan 2008, my salary reduction started at $1291 per month, for a year end total of $15,492 for 2008. I called TIAA-CREF today to ensure that everything was in order before the close of the year (their quarterly statements make it unclear how much I had actually contributed this year). The representative at CREF told be that MY total contributions to my university's 401a plan and my 403b could only total $15500 in aggregate, and that I have overcontributed by $4400 this year. I spoke with my HR person (the same one I signed up for the 403b plan and filled out the salary reduction forms) and she insists that my 401a contributions cannot be counted against my 403b contributions. I again called CREF and received the same answer and they said they were going to have to refund the $4400 to my institution for redisbursment to me. I have searched ALL OVER the internet trying to figure out these plans. I currently have a 401a optional state retirement plan with employee (me) and employer contributions, and a 403b to which I have contributed $15,492 this year. Who is right? TIAA-CREF or my HR representative? This is so frustrating that no one seems to know what is going on, including me!
thanks
Kelly

[apteacher]

Kelly,

I searched all over, too, and could not find the answer, either. I even searched the IRS site, to no avail. You might try calling the IRS, but I haven't had much luck with that. I called 18 days ago about a 403b matter and discovered that there are no agents available to answer questions. They take your message and "get back to you." Uh-huh. I wonder if the IRS could even answer the question. I wouldn't be surprised if you got multiple answers from different agents.

Perhaps one of the professionals on board here can help.

[sschullo]

Hi Kelly,
For five years I recieved a 401a plan from UCLA extensions where I taught part time. I am no tax specialist but I don't think you have to worry about this as long as the total contributions are below $48,000. Source:This is what I found on the internet.
Steve

[treading water]

Thanks for the information. It will be "interesting" to see how this plays out.

[Scottyd]

The contribution limits are separate, not aggregated. I can't provide a cite for you, so I guess this doesn't help much. If you continue to have a problem let us know, we'll get it for you.

I believe the California State Teachers Retirement System's Defined Benefit Supplement (as well as the DB and Cash Balance programs) are operated as 401(a) plans.......meaning that if contributions DID have to be aggregated we'd have a lot of programs out of compliance!

ScottyD

[intruder]

I signed up for a 403b in the fall of 2007. I filled out a salary reduction form to get the most into the account that I could for 2007, around $9000. Starting Jan 2008, my salary reduction started at $1291 per month, for a year end total of $15,492 for 2008. I called TIAA-CREF today to ensure that everything was in order before the close of the year (their quarterly statements make it unclear how much I had actually contributed this year). The representative at CREF told be that MY total contributions to my university's 401a plan and my 403b could only total $15500 in aggregate, and that I have overcontributed by $4400 this year. I spoke with my HR person (the same one I signed up for the 403b plan and filled out the salary reduction forms) and she insists that my 401a contributions cannot be counted against my 403b contributions. I again called CREF and received the same answer and they said they were going to have to refund the $4400 to my institution for redisbursment to me. I have searched ALL OVER the internet trying to figure out these plans. I currently have a 401a optional state retirement plan with employee (me) and employer contributions, and a 403b to which I have contributed $15,492 this year. Who is right? TIAA-CREF or my HR representative? This is so frustrating that no one seems to know what is going on, including me!
thanks
Kelly

Your HR rep is right.

Tell the bobble heads at cref that 403b annuity contributions are only aggregated with your contributions to a 401(a) plan if you own more than 50% of the employer who sponsors the qualified plan. The answer is in IRS publication 571, P4-5 which is available free at irs.gov. Just hit the tab under IRS publications. You should ask the bobbleheads where they get the authority to refund money from your 403b plan without your consent and then give their names to your HR rep so they can be fired.

Your contributions to the state ORP are deemed to be an employer contribution to a qualfied plan not an employee contribution to a retirement plan which must be aggregated with your 403b contributions. I am assuming that you work for a state university.

Your 403b salary reduction contributions would only be aggregated with employer contributions to another 403b plan.

[JudyS]

Kelly --
I ran into this problem several years ago, getting different answers from my mutual fund company (in this case Vanguard), from an accountant, and from a 403b salesman for another company. In fact, at that time the limit was $10,000 and Vanguard said I could contribute 0 (ZERO) and everyone else said I could contribute the full $10,000. I even contacted the legal department at Vanguard and had them run in circles a few times and got their opinion in writing. Then I found the IRS citation, read it, and realized it was open to interpretation. So I kept everything for years just in case of legal problems, contributed as much as I could, and no one ever said anything. I concluded two things: (1) Vanguard (and TIAA-CREF, probably) took the most conservative possible interpretation, and (2) it was open to interpretation anyway.

Of course, my little story is no guarantee of anything, but be assurred that you are not alone, if that helps!

JudyS

[treading water]

Thanks everyone for the very helpful information. I will discuss again tomorrow with my HR rep.

[treading water]

Your HR rep is right.

Tell the bobble heads at cref that 403b annuity contributions are only aggregated with your contributions to a 401(a) plan if you own more than 50% of the employer who sponsors the qualified plan. The answer is in IRS publication 571, P4-5 which is available free at irs.gov. Just hit the tab under IRS publications. You should ask the bobbleheads where they get the authority to refund money from your 403b plan without your consent and then give their names to your HR rep so they can be fired.

Your contributions to the state ORP are deemed to be an employer contribution to a qualfied plan not an employee contribution to a retirement plan which must be aggregated with your 403b contributions. I am assuming that you work for a state university.

Your 403b salary reduction contributions would only be aggregated with employer contributions to another 403b plan.

Thanks so much for the information. I have forwarded this to my HR rep as she will be speaking with TIAA-CREF tomorrow.

[Michael Devault]

You might take a look at IRC section 402(g)(3). If your contributions to the 401(a) plan are made by salary reduction, such as under a CODA arrangement (e.g., a 401(k) plan), the contributions are aggregated.

However, if the contributions to the 401(a) plan are made pursuant to a one-time irrevocable election made at initial eligibility to participate in the plan, then they are not aggregated. This exception is the one used to exclude mandatory contributions to state teachers' retirement plans from the annual limit on salary reduction contributions.

Hope this is of some benefit.

[intruder]

You might take a look at IRC section 402(g)(3). If your contributions to the 401(a) plan are made by salary reduction, such as under a CODA arrangement (e.g., a 401(k) plan), the contributions are aggregated.

However, if the contributions to the 401(a) plan are made pursuant to a one-time irrevocable election made at initial eligibility to participate in the plan, then they are not aggregated. This exception is the one used to exclude mandatory contributions to state teachers' retirement plans from the annual limit on salary reduction contributions.

Hope this is of some benefit.

Optional retirement programs are established by public employers as a qualified money purchase plan, not a 401k plan because employees are required to contribute to the plan. Employee contributions to qualified pubic employee retirement plans are permitted to be made on pre tax basis as an employer contribution under IRC 414(h)(2).

[geertom]

1-Overall contributions are determined at the employer level. Intruder is correct about the control issue, but only as to non-salary reduction contributions.

2-Salary reduction contributions are limited, for 403(b) and 401(a), at the employee level, because both are made under 402(g).

3-457 contributions are wholly separate, except for some interaction between the 457 catch-up and the regular, 414(v) catch-up.

TIAA-CREF is correct. If you want to increase beyond one times the limit, you should ask your HR person if they have a 457.

[intruder]

1-Overall contributions are determined at the employer level. Intruder is correct about the control issue, but only as to non-salary reduction contributions.

2-Salary reduction contributions are limited, for 403(b) and 401(a), at the employee level, because both are made under 402(g).

3-457 contributions are wholly separate, except for some interaction between the 457 catch-up and the regular, 414(v) catch-up.

TIAA-CREF is correct. If you want to increase beyond one times the limit, you should ask your HR person if they have a 457.

Tom:

Could you please explain why you think TIAA-CFREF is correct??? Just to bring you up to speed, TW is making a $4400 contribution to a 401(a) qualified plan which not a 401k plan subject to 402(g) but is an state ORP in which employee contributions are excludible from income as an employer contribution under IRC 414(h)(2) but which are not includible as an employee salary reduction contributions under 402(g). See Rev Rul. 81-35.

[apteacher]

I am so impressed with the technical expertise of some on this forum. But when even the experts disagree, what hope does that leave for the rest of us?

[sschullo]

AP,
I wonder if Warren Buffett takes into account with his investment strategies the likes of 402g, 414v, IRC 414 h2, 402g3, CODA agreement. My favorite is the word "aggregate." I don't know why, its just so funny to be reading this stuff year after year and it doesn't mean a thing. I bet it doesn't mean much to Warren Buffett either.
My real favorite word is simplicity.
Happy New Year,
Steve