415 Limits / Excess Annual Additions
What are 415 limits?
Well, we've already found that there is a limit on how much an employee can contribute to a 401k or 403b plan, which
is $15,500 in 2008 (402g Limit). But, there is also a limit on how much can be contributed to one of these plans
by both the employee and employer together. This is called the 415c limit, or limit on Annual additions.
This limit is $46,000 in 2008.
This means that the combination of employee deferrals,
employer match, and profit sharing contributions
cannot exceed a total of $46,000 for 2008. Again, 415c gets its name from the section 415c of the Internal Revenue Code where the rules appear.
Let's say you meet the 401k contribution limit of $15,500 and you also received matching contributions of $5,000, the total
now contributed to the account is $20,500. This means that any other contributions that are made to the account, including profit
sharing contributions, cannot exceed $25,500 (this sounds like a lot, but you'd be surprised how many employers give profit sharing
contributions this size).
Below is the current and past threshold leveles for the 415c limitations:
That's really all there is to it!
