Employer Contributions

One type of contribution that can be made to the Plan is Employer Contributions. Each Participating Employer is allowed to decide how much it wants to contribute to the Plan on behalf of eligible employees. There is no requirement that your employer must contribute to the Plan, so you must discuss with your employer whether it will make Employer Contributions to the Plan, and if so, how much those Employer Contributions will be.

Salary Reduction Contributions

Another important type of contribution is Salary Reduction Contributions, which you make to the Plan by means of voluntary salary reduction. This type of contribution allows you to contribute a certain portion or percent of your compensation to the Plan. You choose how much you want to contribute.  The annual limit for 2024 is $23,000 and for 2023 is $22,500. If you are 50 or older, you can make an additional $7,500 in salary reduction contributions in 2024 and in 2023.

There are two types of Salary Reduction Contributions that can be made to the plan:  Pre-tax contributions and Roth contributions (after-tax) .

Pre-tax contributions reduce your currently taxable income by the amount of your contribution, saving you current tax dollars. The idea is that, since you are not actually receiving a portion of your salary now, you are also not taxed on it now. However, non-ordained employees do pay employment taxes (FICA, FUTA and Medicare) on their Salary Reduction Contributions.

Roth contributions are made with after-tax dollars and do not reduce your current taxable income.  If certain requirements are met, and your Roth Contributions are distributed in what is called a “qualified distribution,” your Roth Contributions (and the earnings on those contributions) are not taxed at distribution.

In order to make Salary Reduction Contributions, you must complete a salary reduction agreement indicating the dollar amount or percentage of your compensation that you would like to contribute to the Plan and the type of salary reduction contributions you would like to make.  You can make both type of contributions.  You may download a copy of a salary reduction agreement or obtain one from the Board by calling the Board’s toll-free number at (877) 767-7738.

After-Tax Contributions

In addition to Salary Reduction Contributions, you can also make After-Tax Contributions to the Plan. These are additional contributions that you choose to contribute on an “after-tax” basis. You can make After-Tax Contributions by sending a check to the Board, setting up an automatic bank draft from your personal bank account, or online using a debit or credit card.

Unlike Salary Reduction Contributions, After-Tax Contributions do not reduce your currently taxable income by the amount contributed. However, earnings on any After-Tax Contributions you make, like all earnings in the Plan, are not taxed currently.

Rollover and Transfer Contributions

If you are a participant in another retirement plan, or if you have been contributing to another 403(b) tax-sheltered annuity provider through your employer, you may also be able to make a Rollover Contribution or a Transfer Contribution to this Plan. A Rollover Contribution is a direct rollover of a distribution made from another retirement plan or an IRA into your Account in this Plan. A Transfer Contribution is a transfer directly from another 403(b) annuity provider to the Plan. There are a number of special rules and limitations on Rollover and Transfer Contributions. Therefore, if you are a participant in another retirement plan or IRA, or if you have made retirement contributions to a different 403(b) provider, you should check with the administrator or the provider for that plan, as well as the Board, to see if you are eligible to make a Rollover or Transfer Contribution to the Plan.

Contribution Limits

There are two limits on the amount of contributions that can be made to your Account. The first limit only applies to your voluntary Salary Reduction Contributions and Roth Contributions. The other limit applies to all contributions made to the Plan on your behalf – both your own voluntary contributions and employer contributions. You cannot exceed either of these limits.

Limit on Employee Elective Contributions The first contribution limit is that the total amount of your voluntary Salary Reduction Contributions and/or Roth Contributions cannot exceed a specified dollar amount. For 2024, that dollar amount is $23,000 and for 2023 it is $22,500 but no more than 100% of your taxable income (for ministers, housing allowance is not included in your taxable income). If you are 50 or older, you can make an additional $7,500 in salary reduction contributions in 2024 and in 2023.

Limit on Total Contributions The second contribution limit is that the total amount of your Salary Reduction Contributions, Roth Contributions, After-Tax Contributions and Employer Contributions in a calendar year cannot exceed 100% of your taxable compensation or a specified dollar amount, whichever is less. For 2024, that dollar amount is $69,000 and for 2023 it is $66,000. If you are 50 or older, this limit increases by $7,500 in 2024 and in 2023. Please note that for this purpose, the limit is based on taxable compensation. This means that “compensation” used for purposes of the second contribution limit cannot include any tax-excludible housing allowance (if you are a minister).

Contributions Are Intended for Retirement

Remember, it is generally expected that all contributions will stay in the Plan until you retire. Although it is possible to take a distribution of some of your employee contributions prior to retirement, this Plan is not intended to be used like a savings account. Rather, it is designed to provide funds for you in retirement.

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