Transparent method
The formula
Worked example
Example inputs
How to interpret the result
A 403(b) plan's total contribution capacity comes from up to three separate pieces stacked together, the employee's own elective deferral, an employer contribution, and in some plans a long-service catch-up provision, and treating the plan as having one single flat limit misses real additional capacity some employees actually have available.
Before you rely on it
What to check
Check separately for long-service catch-up eligibility in addition to the standard age-based catch-up, since 403(b) plans can offer both under specific conditions that a generic limit overlooks.
The common error
Where people go wrong with 403(b) contribution calculator
Assuming a 403(b) has the identical simple limit structure as a standard 401(k). Some 403(b) plans include an additional long-service catch-up provision that a straight 401(k) comparison misses entirely.
Sensitivity evidence
How employee contribution election changes the employee contribution
| Employee contribution election | Employee contribution | Total employee and employer contributions | Unused overall plan capacity |
|---|---|---|---|
| 11.0% | $11,000 | $17,000 | $55,000 |
| 13.0% | $13,000 | $19,000 | $53,000 |
| 15.0%worked example | $15,000 | $21,000 | $51,000 |
| 17.0% | $17,000 | $23,000 | $49,000 |
| 19.0% | $19,000 | $25,000 | $47,000 |
Every input, tested
Which input moves the employee contribution most
| Input | Tested from | To | Employee contribution at each end | Swing |
|---|---|---|---|---|
| Employee contribution election | 13.0% | 17.0% | $13,000 to $17,000 | $4,000 (27%) |
| Eligible annual compensation | $90,000 | $110,000 | $13,500 to $16,500 | $3,000 (20%) |
| Applicable employee deferral limit | $22,050 | $26,950 | $15,000 to $15,000 | none |
| Employer contribution | $5,400 | $6,600 | $15,000 to $15,000 | none |
| Applicable overall plan limit | $64,800 | $79,200 | $15,000 to $15,000 | none |
Two variables at once
Employee contribution by employee contribution election and eligible annual compensation
| Employee contribution election \ Eligible annual compensation | $80,000 | $100,000 | $120,000 |
|---|---|---|---|
| 11.0% | $8,800 | $11,000 | $13,200 |
| 13.0% | $10,400 | $13,000 | $15,600 |
| 15.0% | $12,000 | $15,000 | $18,000 |
| 17.0% | $13,600 | $17,000 | $20,400 |
| 19.0% | $15,200 | $19,000 | $22,800 |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Eligible annual compensation | $100,000 |
| Employee contribution election | 15.0% |
| Applicable employee deferral limit | $24,500 |
| Employer contribution | $6,000 |
| Applicable overall plan limit | $72,000 |
| Employee contribution | $15,000 |
| Total employee and employer contributions | $21,000 |
| Unused overall plan capacity | $51,000 |
Where the inputs come from
A 403(b) is the workplace plan for public schools, hospitals, universities and many nonprofits. Eligible compensation, contribution election and employer contribution work as in a 401(k), and the employee deferral limit and overall plan limit are the same annual IRS figures. Some long-serving employees of qualifying organizations can also contribute extra under a special 15-year catch-up rule, so ask your plan administrator.
Using the employee contribution in a real decision
Compare investment options, since 403(b) plans often hold annuity contracts with higher fees than the mutual funds that are also available.
When the result stops applying
Some 403(b) plans offer few investment choices and high fees, and many do not match contributions. Church and public plans are not always subject to the same federal protections as private 401(k) plans. Combining several plans requires tracking the employee deferral limit across all of them. Withdrawals before 59½ generally face a 10% penalty.
What to compare it with
The 401(k) contribution calculator uses the same math for private employers, and the IRA pages cover separate accounts. Check your investment costs with the expense ratio calculator, and project the balance on the retirement savings calculator. A 457(b) plan can add to the total you can save.
People also ask
Frequently asked questions
What is the difference between a 403(b) and a 401(k)?
A 403(b) is offered by public schools and nonprofits, often with annuity or custodial account options, while a 401(k) is for private employers. Contribution limits are the same.
Can I have a 403(b) and a 457(b)?
Yes, and their limits are separate, so eligible employees can contribute the maximum to both in the same year.
Are 403(b) fees higher?
They can be, particularly in annuity contracts. Compare the expense ratios and any surrender charges with the mutual fund options in the plan.