02-P-027 Deferred Compensation and Voluntary Tax Sheltered Annuity Limits (Supersedes 01-P-026 )
Posted on October 21, 2021 at 12:50 PM by Kansas Department of Administration
|SUBJECT:||Deferred Compensation and Voluntary Tax Sheltered Annuity Limits|
|EFFECTIVE DATE:||January 1, 2002|
|CONTACT:||Janice Wolfley||(785) 296-3699||(email@example.com)|
|Sunni Zentner||(785) 296-7058||(firstname.lastname@example.org)|
|SUMMARY:||2002 Deferred Compensation and Voluntary Tax Sheltered Annuity Changes|
457(b) Deferred Compensation:
The deferred compensation annual contribution limit increases from the lesser of $8,500 or 33 1/3% of includible compensation to the lesser of $11,000 or 100% of includible compensation. The dollar limit will increase annually by $1,000 through plan year 2006 and indexed for inflation by $500 increments beginning in plan year 2007.
The deferred compensation special catch-up limit increases from $15,000 to two times the normal limit, which is $22,000 for plan year 2002. This special catch-up is only available to employees who are within three years of normal retirement age.
A new catch-up provision for participants age 50 or over (Benefit Plan 457DEC) increases the annual contribution limit by $1,000 making the limit $12,000 for plan year 2002. Please note that the two different catch-up provisions cannot be used concurrently.
The limit on annual contributions for tax sheltered annuities increases from the lesser of 25% of includible compensation or $35,000 to the lesser of 100% of includible compensation or $40,000. The dollar limit is subject to future indexing in $1,000 increments.
The limit on elective deferrals will increase from $10,500 to $11,000. The dollar limit will increase annually by $1,000 through plan year 2006 and indexed for inflation by $500 increments beginning in plan year 2007.
The Act repeals the Maximum Exclusion Allowance. The Alternative Limits A (Year of Separation), B (Any Year Limit), and C (Overall Limit) are also repealed.
A new catch-up provision for participants age 50 or over increases the annual contribution limit by $1,000 making the limit $12,000 for plan year 2002.
The Act repeals the coordination requirements for employees who participate in both 403(b) - Tax Sheltered Annuities, and 457(b) - Deferred Compensation plans. Employees eligible for both plans will be able to defer the full amount to both plans.
Aetna will notify all Deferred Compensation Plan Participants that are currently at the limits, giving them the opportunity to increase their contributions. They will also notify those participants eligible for the new catch-up provision. Please inform employees in your agency of this change.
Regent's institutions are responsible for applying the maximum VTSA formulas for their employees.