Deferred Compensation - Annual Limits

IRS maximum salary reduction allowance

It is your responsibility to ensure that a salary reduction (salary that is excluded from income tax) does not exceed the amounts permitted under Section 457(b) and 402(g) of the Internal Revenue Code.


Reduction amounts under all 457(b) plans with all employers during the 2018 calendar year are limited to $18,500 under IRC Section 402(g).  After 2018, the 402(g) limit may be adjusted by the IRS for changes in the cost of living. 



Catch-up contributions

You can make additional contributions to the plan during one or more of the last three taxable years ending before the year you attain normal retirement age.  The maximum amount that can be contributed is the lesser of:


o        Twice the applicable dollar amount in effect for the year, or

o        The sum of (i) the primary limitation amount (100 percentage of compensation up to the dollar limitation) and (ii) that portion of the primary limitation amount not used in prior taxable years in which you were eligible to participate in the plan.


The general catch-up limitation is available to a participant during one three-year period only.  If you use the general catch-up and then postpone retirement or return to work after retirement, the general catch-up limitation is not available again.


Excess contributions

If you defer more than these limitation amounts, by law, your contributions cannot be returned to you.  Instead, any excess contributions will be “recharacterized” as contributions to an “ineligible” deferred compensation plan. 


If this occurs and you terminate before age 65 you will forfeit the contributions. 




Contact your campus benefits office for more information.

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