STATE OF CONNECTICUT
THE STATE COMPTROLLER
55 ELM STREET
HARTFORD, CONNECTICUT 06106-1775
MEMORANDUM NO. 2006-37
November 29, 2006
TO THE HEADS OF ALL STATE AGENCIES
|ATTENTION:||Personnel and Payroll Officers, Chief Administrative and Fiscal Officers and Business Managers|
|SUBJECT:||Contribution Limits for 457 Deferred Compensation and 403(b) Tax Sheltered Annuity Plans|
The purpose of this memorandum is to advise of the contribution limits applicable to Internal Revenue Code (“IRC”) Section 457 and 403(b), which governs the State of Connecticut Defined Contribution Plans, 457 Deferred Compensation Plan and 403(b) Tax Sheltered Annuity Plan.
Pursuant to federal law, the Pension Protection Act of 2006 provides for the deferral limits for employee benefit plans to now be indexed pursuant to the Consumer Price Index (CPI). In that connection, deferral limits may increase annually by increments of $500.00 provided there is a sufficient increase in the CPI.
A. Deferred Compensation IRC Section 457 Contribution Limits
Effective January 1, 2007, the annual dollar limit for contributions to Section 457 plans increased from $15,000 to the lesser of $15,500 or 100% of gross salary.
B. Tax Sheltered Annuity IRC Section 403(b) Contribution Limits
Effective January 1, 2007, the annual dollar limit for contributions to Section 403(b) plans increased from $15,000 to the lesser of $15,500 or 100% of gross salary.
Inasmuch as the coordination of benefits between Sections 457 and 403(b) is no longer applicable, participants in the 403(b) plan may contribute up to the maximum in both plans.
C. Age-50 Catch-up Contributions
The Age-50 Catch-up contribution is available to participants who are age 50 or older by December 31st. Effective January 1, 2007, the annual dollar limit for eligible participants remains at $5,000. Eligible participants in both a 457 and a 403(b) plan can make Age-50 Catch-up contributions to both plans. Participants electing Age 50 Catch-up who contribute to both a 457 and a 403(b) plan are eligible to make a total maximum contribution of $20,500 to each plan.
D. Special Section 457(b) Catch-up Contributions
Under certain circumstances participants may be eligible to make Special Section 457(b) Catch-up contributions. Further information regarding eligibility may be directed to the State’s plan administrator at 1-800-584-6001.
Participants in Section 457 plans may not make Age-50 Catch-up contributions in years that they elect to make Special Section 457 (b) Catch-up contributions.
403(b) eligible employees are ineligible to make Special Section 457(b) Catch-up contributions.
Questions related to establishing personal limitations may be directed to the
State’s plan administrator at 1-800-584-6001. Questions related to this
memorandum may be directed to the Retirement & Benefit Services Division,
Employee Benefits Unit at (860) 702-3543.
Very truly yours,
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