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            Department of the Treasury
            Internal Revenue Service
                                                         Future Developments
                                                         For the latest information about developments related to 
Publication 571                                          Pub.  571,  such  as  legislation  enacted  after  it  was 
(Rev. January 2023)                                      published, go to IRS.gov/Pub571.
Cat. No. 46581C

                                                         What’s New for 2022
Tax-Sheltered
                                                         Retirement  savings  contributions  credit.    For  2022, 
                                                         the adjusted gross income limitations have increased from 
Annuity Plans                                            $66,000  to  $68,000  for  married  filing  jointly  filers;  from 
                                                         $49,500 to $51,000 for head of household filers; and from 
                                                         $33,000 to $34,000 for single, married filing separately, or 
(403(b) Plans)                                           qualifying  widow(er)  with  dependent  child  filers.  See 
                                                         chapter 10, Retirement Savings Contributions Credit (Sav-
                                                         er's Credit), for additional information.
For Employees of Public 
                                                         Limit on elective deferrals.            For 2022, the limit on elec-
Schools and Certain                                      tive deferrals has increased from $19,500 to $20,500.
                                                         Limit on annual additions.              For 2022, the limit on annual 
Tax-Exempt                                               additions has increased from $58,000 to $61,000.
Organizations

                                                         What’s New for 2023
                                                         Retirement  savings  contributions  credit.    For  2023, 
                                                         the adjusted gross income limitations have increased from 
                                                         $68,000  to  $73,000  for  married  filing  jointly  filers;  from 
                                                         $51,000 to $54,750 for head of household filers; and from 
                                                         $34,000 to $36,500 for single, married filing separately, or 
                                                         qualifying  widow(er)  with  dependent  child  filers.  See 
                                                         chapter 10, Retirement Savings Contributions Credit (Sav-
                                                         er's Credit), for additional information.
                                                         Limit on elective deferrals.            For 2023, the limit on elec-
                                                         tive deferrals has increased from $20,500 to $22,500.
                                                         Limit on annual additions.              For 2023, the limit on annual 
                                                         additions has increased from $61,000 to $66,000.

                                                         Reminders
                                                         Retirement  income  accounts.           Division  O,  section  111 
                                                         of P.L. 116-94 clarifies that employees described in sec-
                                                         tion 414(e)(3)(B) (which include ministers, employees of a 
                                                         tax-exempt  church-controlled  organization  (including  a 
                                                         nonqualified church-controlled organization), and employ-
                                                         ees who are included in a church plan under certain cir-
                                                         cumstances after separation from the service of a church) 
                                                         can participate in a 403(b)(9) retirement income account, 
                                                         effective for years beginning before, on, or after Decem-
                                                         ber 20, 2019.
                                                         Distributions  in  the  case  of  adoption  or  birth  of  a 
                                                         child.  For distributions made after December 31, 2019, a 
                                                         qualified birth or adoption distribution may be made from a 
Get forms and other information faster and easier at:    403(b) plan and is not subject to the 10% additional tax on 
• IRS.gov (English)    • IRS.gov/Korean (한국어)            early distributions. A qualified birth or adoption distribution 
• IRS.gov/Spanish (Español)  • IRS.gov/Russian (Pусский) is a distribution made from your 403(b) plan (or other ap-
• IRS.gov/Chinese (中文) • IRS.gov/Vietnamese (Tiếng Việt) 
                                                         plicable  eligible  retirement  plan)  that  is  no  greater  than 

Dec 27, 2022

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$5,000 and is made during the 1-year period beginning on calling 1-800-THE-LOST (1-800-843-5678) if you recog-
the date on which the child is born or legally adopted. nize a child.
Minimum required distributions. For distributions re-
quired to be made after 2019, the age for the required be-
ginning date for mandatory distributions is changed to age Introduction
72 for 403(b) owners reaching age 70 / after December 1 2
31, 2019. This publication can help you better understand the tax
rules that apply to your 403(b) (tax-sheltered annuity)
Waiver of 10% additional tax on early distributions.
plan.
Section 2202 of P.L. 116-136 waives the 10% additional
In this publication, you will find information to help you
tax on qualified COVID-19 distributions up to $100,000. A
do the following.
qualified COVID-19 distribution is a distribution from an el-
igible retirement plan: • Determine the maximum amount that can be contrib-
uted to your 403(b) account in 2023.
1. Made on or after January 1, 2020, and before Decem-
ber 31, 2020; and • Determine the maximum amount that could have been
contributed to your 403(b) account in 2022.
2. Made to an individual who is diagnosed with the
SARS-CoV-2 virus or with the coronavirus disease • Identify excess contributions.
2019 (COVID-19) by a test approved by the Centers • Understand the basic rules for claiming the retirement
for Disease Control and Prevention; or savings contributions credit.
3. Made to an individual whose spouse or dependent is • Understand the basic rules for distributions and roll-
diagnosed with the SARS-CoV-2 virus or with the co- overs from 403(b) accounts.
ronavirus disease 2019 (COVID-19) by a test ap-
This publication doesn’t provide specific information on
proved by the Centers for Disease Control and Pre-
the following topics.
vention; or
• Distributions from 403(b) accounts. This is covered in
4. Made to an individual who experiences adverse finan- Pub. 575, Pension and Annuity Income.
cial consequences as a result of being quarantined,
being furloughed or laid off or having work hours re- • Rollovers. This is covered in Pub. 590-A, Contribu-
duced due to the virus or disease, being unable to tions to Individual Retirement Arrangements (IRAs),
work due to lack of childcare due to such virus or dis- and Pub. 590-B, Distributions from Individual Retire-
ease, or closing or reducing hours of a business ment Arrangements (IRAs).
owned or operated by the individual due to such virus
or disease. How to use this publication. This publication is organ-
ized into chapters to help you find information easily.
Repayment of qualified COVID-19 distributions. Chapter 1 answers questions frequently asked by
Generally, you may repay any portion of a qualified 403(b) plan participants.
COVID-19 distribution that is eligible for tax-free rollover Chapters 2 through explain the rules and terms you 6
treatment to an eligible retirement plan. You have 3 years need to know to figure the maximum amount that could
from the day after the date you received a qualified have been contributed to your 403(b) account for 2022
COVID-19 distribution to make a repayment. The amount and the maximum amount that can be contributed to your
of your repayment can't be more than the amount of the 403(b) account in 2023.
original distribution. Amounts that are repaid are treated Chapter 7 provides general information on the preven-
as a trustee-to-trustee transfer and are not included in in- tion and correction of excess contributions to your 403(b)
come. account.
Income inclusion over 3-year period. You may Chapter 8 provides general information on distribu-
choose to have qualified COVID-19 distributions included tions, transfers, and rollovers.
in income in equal amounts over 3 years. However, if you Chapter 9 provides blank worksheets that you will need
elect, you can include the entire distribution in your in- to accurately and actively participate in your 403(b) plan.
come in the year it was received. Filled-in samples of most of these worksheets can be
found throughout this publication.
More information. See Pubs. 575, 590-A, and 590-B for Chapter 10 explains the rules for claiming the retire-
more information on new rules as a result of P.L. 116-136 ment savings contributions credit (saver's credit).
that provide for tax-favored withdrawals, income inclusion,
and repayments for individuals who were diagnosed with Comments and suggestions. We welcome your com-
or suffered economic losses as a result of COVID-19. ments about this publication and suggestions for future
Photographs of missing children. The IRS is a proud editions.
partner with the National Center for Missing & Exploited You can send us comments through IRS.gov/
Children® (NCMEC). Photographs of missing children se- FormComments. Or, you can write to: Internal Revenue
lected by the Center may appear in this publication on pa- Service, Tax Forms and Publications, 1111 Constitution
ges that would otherwise be blank. You can help bring Ave. NW, IR-6526, Washington, DC 20224.
these children home by looking at the photographs and

Page 2 Publication 571 (January 2023)

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Although  we  can’t  respond  individually  to  each  com-
ment received, we do appreciate your feedback and will 
consider  your  comments  and  suggestions  as  we  revise            1.
our tax forms, instructions, and publications. Don’t send 
tax questions, tax returns, or payments to the above ad-
dress.                                                                403(b) Plan Basics
Getting answers to your tax questions.         If you have 
a tax question not answered by this publication or the How            This chapter introduces you to 403(b) plans and accounts. 
To Get Tax Help section at the end of this publication, go            Specifically, the chapter answers the following questions.
to  the  IRS  Interactive  Tax  Assistant  page  at IRS.gov/          • What is a 403(b) plan?
Help/ITA  where  you  can  find  topics  by  using  the  search 
feature or by viewing the categories listed.                          • What are the benefits of contributing to a 403(b) plan?
                                                                      • Who can participate in a 403(b) plan?
Getting  tax  forms,  instructions,  and  publications. 
Go to IRS.gov/Forms to download current and prior-year                • Who can set up a 403(b) account?
forms, instructions, and publications.                                • How can contributions be made to my 403(b) ac-
Ordering tax forms, instructions, and publications.                     count?
Go to IRS.gov/OrderForms to order current forms, instruc-             • Do I report contributions on my tax return?
tions,  and  publications;  call  800-829-3676  to  order 
prior-year  forms  and  instructions.  The  IRS  will  process        • How much can be contributed to my 403(b) account?
your order for forms and publications as soon as possible. 
Don’t resubmit requests you've already sent us. You can 
get forms and publications faster online.                             What Is a 403(b) Plan?

Useful Items                                                          A  403(b)  plan,  also  known  as  a  tax-sheltered  annuity 
You may want to see:                                                  (TSA) plan, is a retirement plan for certain employees of 
                                                                      public  schools,  employees  of  certain  tax-exempt  organi-
Publication                                                           zations, and certain ministers.
  517   517 Social Security and Other Information for                 Individual accounts in a 403(b) plan can be any of the 
        Members of the Clergy and Religious Workers                   following types.
  575   575 Pension and Annuity Income                                • An annuity contract, which is a contract provided 
                                                                        through an insurance company.
  590-A          590-A Contributions to Individual Retirement 
        Arrangements (IRAs)                                           • A custodial account, which is an account invested in 
                                                                        mutual funds.
  590-B          590-B Distributions from Individual Retirement 
        Arrangements (IRAs)                                           • A retirement income account set up for church em-
                                                                        ployees. Generally, retirement income accounts can 
Form (and Instructions)                                                 invest in either annuities or mutual funds.
  W-2   W-2 Wage and Tax Statement                                    We use the term “403(b) account” to refer to any one of 
  1099-R               1099-R Distributions From Pensions, Annuities, these  funding  arrangements  throughout  this  publication, 
        Retirement or Profit-Sharing Plans, IRAs,                     unless otherwise specified.
        Insurance Contracts, etc.
  5329      5329 Additional Taxes on Qualified Plans (Including 
        IRAs) and Other Tax-Favored Accounts                          What Are the Benefits of 

  5330      5330 Return of Excise Taxes Related to Employee           Contributing to a 403(b) Plan?
        Benefit Plans
  8880      8880 Credit for Qualified Retirement Savings              There are three benefits to contributing to a 403(b) plan.
        Contributions                                                 • The first benefit is that you don’t pay income tax on al-
                                                                        lowable contributions until you begin making with-
                                                                        drawals from the plan, usually after you retire. Allowa-
                                                                        ble contributions to a 403(b) plan are either excluded 
                                                                        or deducted from your income. However, if your con-
                                                                        tributions are made to a Roth contribution program, 
                                                                        this benefit doesn’t apply. Instead, you pay income tax 
                                                                        on the contributions to the plan but distributions from 
                                                                        the plan (if certain requirements are met) are tax free.
                                                                        Note. Generally, employees must pay social secur-
                                                                        ity and Medicare tax on their contributions to a 403(b) 

                                                                              Chapter 1 403(b) Plan Basics    Page 3

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plan, including those made under a salary reduction a. They are employed by organizations that aren’t
agreement. See chapter 4, Limit on Elective Deferrals, section 501(c)(3) organizations.
for more information.
b. They function as ministers in their day-to-day pro-
• The second benefit is that earnings and gains on fessional responsibilities with their employers.
amounts in your 403(b) account aren’t taxed until you
withdraw them. Earnings and gains on amounts in a Throughout this publication, the term “chaplain” will be
Roth contribution program aren’t taxed if your with- used to mean ministers described in the third category in
drawals are qualified distributions. Otherwise, they are the list above.

taxed when you withdraw them. Example. A minister employed as a chaplain by a
• The third benefit is that you may be eligible to take a state-run prison and a chaplain in the U.S. Armed Forces
credit for elective deferrals contributed to your 403(b) are eligible employees because their employers aren’t
account. See chapter 10, Retirement Savings Contri- section 501(c)(3) organizations and they are employed as
butions Credit (Saver's Credit), for more information. ministers.
Excluded. If an amount is excluded from your income, Universal availability. Generally, all eligible employ-
it isn’t included in your total wages on your Form W-2. ees (with certain exceptions) of an employer must be per-
This means that you don’t report the excluded amount on mitted to make elective deferrals (including Roth elective
your tax return. deferrals) if any employee of the employer may make
elective deferrals. If your employer offers a 403(b) plan,
Deducted. If an amount is deducted from your in- you should have received information about your eligibility
come, it is included with your other wages on your Form to participate.
W-2. You report this amount on your tax return, but you
are allowed to subtract it when figuring the amount of in-
come on which you must pay tax.
Who Can Set up a 403(b)

Account?
Who Can Participate in a
You can’t set up your own 403(b) account. Only employ-
403(b) Plan? ers can set up 403(b) accounts. A self-employed minister
can’t set up a 403(b) account for its own benefit. If you are
Any eligible employee can participate in a 403(b) plan. a self-employed minister, only the organization (denomi-
Eligible employees. The following employees are eligi- nation) with which you are associated can set up an ac-
ble to participate in a 403(b) plan. count for your benefit.

• Employees of tax-exempt organizations established
under section 501(c)(3). These organizations are usu-
ally referred to as “section 501(c)(3) organizations” or How Can Contributions Be
simply “501(c)(3) organizations.”
Made to My 403(b) Account?
• Employees of public school systems who are involved
in the day-to-day operations of a school. Generally, only your employer can make contributions to
• Employees of cooperative hospital service organiza- your 403(b) account. However, some plans will allow you
tions. to make after-tax contributions (defined below).
• Civilian faculty and staff of the Uniformed Services The following types of contributions can be made to
University of the Health Sciences. 403(b) accounts.
• Employees of public school systems organized by In- 1. Elective deferrals. These are contributions made
dian tribal governments who are involved in the under a salary reduction agreement. This agreement
day-to-day operations of a school. allows your employer to withhold money from your
• Certain ministers (explained next). paycheck to be contributed directly into a 403(b) ac-
count for your benefit. Except for Roth contributions,
Ministers. The following ministers are eligible employ- you don’t pay income tax on these contributions until
ees for whom a 403(b) account can be established. you withdraw them from the account. If your contribu-
tions are Roth contributions, you pay taxes on your
1. Ministers employed by section 501(c)(3) organiza-
contributions but any qualified distributions from your
tions.
Roth account are tax free.
2. Self-employed ministers. A self-employed minister is
2. Nonelective contributions. These are employer
treated as employed by a tax-exempt organization
contributions that aren’t made under a salary reduc-
that is an eligible employer.
tion agreement. Nonelective contributions include
3. Ministers (chaplains) who meet both of the following matching contributions, discretionary contributions,
requirements. and mandatory contributions made by your employer.

Page 4 Chapter 1 403(b) Plan Basics

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You don’t pay income tax on these contributions until Chapters 2 through provide information on how to de-6
you withdraw them from the account. termine the amount that can be contributed to your 403(b)
account.
3. After-tax contributions. These are contributions
(that aren’t Roth contributions) you make with funds Worksheets are provided in chapter 9 to help you de-
that you must include in income on your tax return. A termine the maximum amount that can be contributed to
salary payment on which income tax has been with- your 403(b) account each year. Chapter 7, Excess Contri-
held is a source of these contributions. If your plan al- butions, describes how to prevent excess contributions
lows you to make after-tax contributions, they aren’t and how to get an excess contribution corrected.
excluded from income and you can’t deduct them on
your tax return.
4. A combination of any of the three contribution types
listed above.
Self-employed minister. If you are a self-employed min- 2.
ister, you are considered both an employee and an em-
ployer, and you can contribute to a retirement income ac-
count for your own benefit. Maximum Amount

Contributable (MAC)
Do I Report Contributions on
Throughout this publication, the limit on the amount that
My Tax Return? can be contributed to your 403(b) account for any year is
referred to as your maximum amount contributable
Generally, you don’t report contributions to your 403(b) (MAC). This chapter:
account (except Roth contributions) on your tax return. • Introduces the components of your MAC,
Your employer will report contributions on your 2022 Form
W-2. Elective deferrals will be shown in box 12 with code • Tells you how to figure your MAC, and
E for pre-tax amounts and code BB for Roth amounts, and • Tells you when to figure your MAC.
the Retirement plan box will be checked in box 13. If you
are a self-employed minister or chaplain, see the discus-
sions next.
Components of Your MAC
Self-employed ministers. If you are a self-employed
minister, you must report the total contributions as a de- Generally, before you can determine your MAC, you must
duction on your tax return. Deduct your contributions on first figure the components of your MAC. The components
line 16 of the 2022 Schedule 1 (Form 1040). of your MAC are:
• The limit on annual additions (chapter 3), and
Chaplains. If you are a chaplain and your employer
doesn’t exclude contributions made to your 403(b) ac- • The limit on elective deferrals (chapter 4).
count from your earned income, you may be able to take a
deduction for those contributions on your tax return.
However, if your employer has agreed to exclude the How Do I Figure My MAC?
contributions from your earned income, you won’t be al-
lowed a deduction on your tax return. Generally, contributions to your 403(b) account are limited
If you can take a deduction, include your contributions to the lesser of:
on line 26 of the 2022 Schedule 1 (Form 1040). Enter the
amount of your deduction and enter “403(b)” on the dotted • The limit on annual additions, or
line next to line 26. • The limit on elective deferrals.
Depending upon the type of contributions made to your
403(b) account, only one of the limits may apply to you.
How Much Can Be Contributed
Which limit applies. Whether you must apply one or
to My 403(b) Account? both of the limits depends on the type of contributions
made to your 403(b) account during the year.
There are limits on the amount of contributions that can be
Elective deferrals only. If the only contributions
made to your 403(b) account each year. If contributions
made to your 403(b) account during the year were elec-
made to your 403(b) account are more than these contri-
tive deferrals made under a salary reduction agreement,
bution limits, penalties may apply.
you will need to figure both of the limits. Your MAC is the
lesser of the two limits.

Chapter 2 Maximum Amount Contributable (MAC) Page 5

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Nonelective contributions only. If the only contribu- • 100% of your includible compensation for your most
tions made to your 403(b) account during the year were recent year of service.
nonelective contributions (employer contributions not
More than one 403(b) account. If you contrib-
made under a salary reduction agreement), you will only
uted to more than one 403(b) account, you must
need to figure the limit on annual additions. Your MAC is CAUTION!
combine the contributions made to all 403(b) ac-
the limit on annual additions.
counts maintained by your employer. If you participate in
Elective deferrals and nonelective contributions. If more than one 403(b) plan maintained by different em-
the contributions made to your 403(b) account were a ployers, you don’t need to combine amounts for annual
combination of both elective deferrals made under a sal- addition limits.
ary reduction agreement and nonelective contributions
(employer contributions not made under a salary reduc- Ministers and church employees. If you are a minis-
tion agreement), you will need to figure both limits. Your ter or a church employee, you may be able to increase
MAC is the limit on the annual additions. your limit on annual additions or use different rules when
figuring your limit on annual additions. For more informa-
Catch-up contributions. If you are age 50 or older, tion, see chapter 5.
you may be able to make additional catch-up contribu-
tions, which are explained in chapter 6. Participation in a qualified plan. If you participated
in a 403(b) plan and a qualified plan, you must combine
You need to figure the limit on elective deferrals to de- contributions made to your 403(b) account with contribu-
termine if you have excess elective deferrals, which are tions to a qualified plan and simplified employee pensions
explained in chapter 7. of all corporations, partnerships, and sole proprietorships
in which you have more than 50% control to determine the
Worksheets. Worksheets are available in chapter 9 to total annual additions.
help you figure your MAC.
You can use Part I of Worksheet 1 in chapter 9 to figure
your limit on annual additions.
When Should I Figure My

MAC? Includible Compensation for

At the beginning of 2023, you should refigure your 2022 Your Most Recent Year of
MAC based on your actual compensation for 2022. This
will allow you to determine if the amount that has been Service
contributed to your 403(b) account for 2022 has exceeded
the allowable limits. In some cases, this will allow you to Definition. Generally, includible compensation for your
avoid penalties and additional taxes. See chapter 7. most recent year of service is the amount of taxable wa-
ges and benefits you received from the employer that
Generally, you should figure your MAC for the current maintained a 403(b) account for your benefit during your
year at the beginning of each tax year using a conserva- most recent year of service.
tive estimate of your compensation. If your compensation
changes during the year, you should refigure your MAC When figuring your includible compensation for your
based on a revised conservative estimate. By doing this, most recent year of service, keep in mind that your most
you will be able to determine if contributions to your recent year of service may not be the same as your em-
403(b) account can be increased or should be decreased ployer's most recent annual work period. This can happen
for the year. if your tax year isn’t the same as your employer's annual
work period.

When figuring includible compensation for your most
recent year of service, don’t mix compensation or service
of one employer with compensation or service of another
employer.
3.

Most Recent Year of Service
Limit on Annual Additions
Your most recent year of service is your last full year of
The first component of MAC is the limit on annual addi- service, ending on the last day of your tax year that you
tions. This is a limit on the total contributions (elective de- worked for the employer that maintained a 403(b) account
ferrals, nonelective contributions, and after-tax contribu- on your behalf.
tions) that can be made to your 403(b) account. The limit
on annual additions is generally the lesser of: Tax year different from employer's annual work pe-
riod. If your tax year isn’t the same as your employer's
• $61,000 for 2022 and $66,000 for 2023, or annual work period, your most recent year of service is

Page 6 Chapter 3 Limit on Annual Additions

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made up of parts of at least two of your employer's annual Generally, includible compensation is the amount of in-
work periods. come and benefits:
Example. A professor who reports income on a calen- • Received from the employer who maintains your
dar-year basis is employed on a full-time basis by a uni- 403(b) account, and
versity that operates on an academic year (October • It must be included in your income.
through May). To figure the includible compensation for
2022, the professor's most recent year of service is from Includible compensation includes the following
January through May 2022 and from October through De- amounts.
cember 2022. • Elective deferrals (employer's contributions made on
your behalf under a salary reduction agreement).
Figuring Your Most Recent Year of Service • Amounts contributed or deferred by your employer un-
To figure your most recent year of service, begin der a section 125 cafeteria plan.
by determining what is a full year of service for • Amounts contributed or deferred, at the election of the
your position. A full year of service is equal to employee, under an eligible section 457 nonqualified
full-time employment for your employer's annual work pe- deferred compensation plan (state or local govern-
riod. ment or tax-exempt organization plan).
Note. For information about treating elective deferrals
After identifying a full year of service, begin counting under section 457 plans as Roth contributions, see
the service you have provided for your employer starting Pub. 575.
with the service provided in the current year.
• Wages, salaries, and fees for personal services
Part-time or employed only part of the year. If you are earned with the employer maintaining your 403(b) ac-
a part-time or a full-time employee who is employed for count.
only part of the year, your most recent year of service is • Income otherwise excluded under the foreign earned
your service this year and your service for as many previ- income exclusion.
ous years as is necessary to total 1 full year of service. To
determine your most recent year of service, add the fol- • Pre-tax contributions (employer's contributions made
lowing periods of service. on your behalf according to your election) to a quali-
fied transportation fringe benefit plan.
• Your service during the year for which you are figuring
the limit on annual additions. Includible compensation does not include the follow-
ing items.
• Your service during your preceding tax years until the
total service equals 1 year of service or you have fig- 1. Your employer's contributions to your 403(b) account.
ured all of your service with the employer. 2. Compensation earned while your employer wasn’t an
eligible employer.
Example. You were employed on a full-time basis
from July through December 2020 (1/2 year of service), 3. Your employer's contributions to a qualified plan that:
July through December 2021 (1/2 year of service), and
a. Are on your behalf, and
October through December 2022 (1/4 year of service).
Your most recent year of service for figuring your limit on b. Are excludable from income.
annual additions for 2022 is the total of your service dur-
ing 2022 (1/4 year of service), your service during 2021 4. The cost of incidental life insurance. See Cost of Inci-
(1/2 year of service), and your service during the months dental Life Insurance, later.
of October through December 2020 (1/4 year of service). If you are a church employee or a foreign mission-
ary, figure includible compensation using the
Not yet employed for 1 year. If, at the close of the year, CAUTION! rules explained in chapter 5.
you haven’t yet worked for your employer for 1 year (in-
cluding time you worked for the same employer in all ear-
Contributions after retirement. Nonelective contribu-
lier years), use the period of time you have worked for the
tions may be made for an employee for up to 5 years after
employer as your most recent year of service.
retirement. These contributions would be based on includ-
ible compensation for the last year of service before retire-
Includible Compensation ment.
After identifying your most recent year of service, the next
step is to identify the includible compensation associated Cost of Incidental Life Insurance

with that full year of service. Includible compensation doesn’t include the cost of inci-
Includible compensation isn’t the same as income in- dental life insurance.
cluded on your tax return. Compensation is a combination
of income and benefits received in exchange for services
provided to your employer.

Chapter 3 Limit on Annual Additions Page 7

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        If all of your 403(b) accounts invest only in mutual      Figure 3-1. Table of 1-Year Term Premiums 
!       funds, then you have no incidental life insurance.        for $1,000 Life Insurance Protection
CAUTION
                                                                  Age      Cost  Age         Cost        Age             Cost
If you have an annuity contract, a portion of the cost of         0. . . . $0.70 35    . . . $0.99     70. . .           $20.62
that contract may be for incidental life insurance. If so, the    1. . . . 0.41  36    . . . 1.01      71. . .           22.72
cost of the insurance is taxable to you in the year contrib-      2. . . . 0.27  37    . . . 1.04      72. . .           25.07
uted  and  is  considered  part  of  your  basis  when  distrib-  3. . . . 0.19  38    . . . 1.06      73. . .           27.57
uted. Your employer will include the cost of your insurance       4. . . . 0.13  39    . . . 1.07      74. . .           30.18
as taxable wages in box 1 of Form W-2.                            5. . . . 0.13  40    . . . 1.10      75. . .           33.05
                                                                  6. . . . 0.14  41    . . . 1.13      76. . .           36.33
                                                                  7. . . . 0.15  42    . . . 1.20      77. . .           40.17
Not all annuity contracts include life insurance. Contact         8. . . . 0.16  43    . . . 1.29      78. . .           44.33
your  plan  administrator  to  determine  if  your  contract  in- 9. . . . 0.16  44    . . . 1.40      79. . .           49.23
cludes incidental life insurance. If it does, you will need to    10. . .  0.16  45    . . . 1.53      80. . .           54.56
figure the cost of life insurance each year the policy is in      11. . .  0.19  46    . . . 1.67      81. . .           60.51
effect.                                                           12. . .  0.24  47    . . . 1.83      82. . .           66.74
                                                                  13. . .  0.28  48    . . . 1.98      83. . .           73.07
        Figuring the cost of incidental life insurance.           14. . .  0.33  49    . . . 2.13      84. . .           80.35
        If  you  have  determined  that  part  of  the  cost  of  15. . .  0.38  50    . . . 2.30      85. . .           88.76
        your annuity contract is for an incidental life insur-    16. . .  0.52  51    . . . 2.52      86. . .           99.16
ance premium, you will need to determine the amount of            17. . .  0.57  52    . . . 2.81      87. . .           110.40
the premium and subtract it from your includible compen-          18. . .  0.59  53    . . . 3.20      88. . .           121.85
                                                                  19. . .  0.61  54    . . . 3.65      89. . .           133.40
sation.                                                           20. . .  0.62  55    . . . 4.15      90. . .           144.30
                                                                  21. . .  0.62  56    . . . 4.68      91. . .           155.80
To  determine  the  amount  of  the  life  insurance  premi-      22. . .  0.64  57    . . . 5.20      92. . .           168.75
ums, you will need to know the following information.             23. . .  0.66  58    . . . 5.66      93. . .           186.44
                                                                  24. . .  0.68  59    . . . 6.06      94. . .           206.70
• The value of your life insurance contract, which is the         25. . .  0.71  60    . . . 6.51      95. . .           228.35
  amount payable upon your death.                                 26. . .  0.73  61    . . . 7.11      96. . .           250.01
                                                                  27. . .  0.76  62    . . . 7.96      97. . .           265.09
• The cash value of your life insurance contract at the           28. . .  0.80  63    . . . 9.08      98. . .           270.11
  end of the tax year.                                            29. . .  0.83  64    . . . 10.41     99. . .           281.05
• Your age on your birthday nearest the beginning of the          30. . .  0.87  65    . . . 11.90
                                                                  31. . .  0.90  66    . . . 13.51
  policy year.                                                    32. . .  0.93  67    . . . 15.20
• Your current life insurance protection under an ordi-           33. . .  0.96  68    . . . 16.92
  nary retirement income life insurance policy, which is          34. . .  0.98  69    . . . 18.70
  the amount payable upon your death minus the cash 
  value of the contract at the end of the year.                            If the current published premium rates per $1,000 
                                                                           of insurance protection charged by an insurer for 
You can use Worksheet A in chapter 9 to determine the             CAUTION! individual  1-year  term  life  insurance  premiums 
cost of your incidental life insurance.                           available to all standard risks are lower than those in the 
                                                                  preceding table, you can use the lower rates for figuring 
Example.     Your new contract provides that your bene-           the cost of insurance in connection with individual policies 
ficiary will receive $10,000 if you should die before retire-     issued by the same insurer.
ment. Your cash value in the contract at the end of the first 
year is zero. Your current life insurance protection for the       Example 1.    An employee, age 44, and the employer 
first year is $10,000 ($10,000 − $0).                             enter into a 403(b) plan that will provide the employee with 
The cash value in the contract at the end of year 2 is            a $500 a month annuity upon retirement at age 65. The 
$1,000,  and  the  current  life  insurance  protection  for  the agreement also provides that if the employee should die 
second year is $9,000 ($10,000 – $1,000).                         before retirement, the beneficiary will receive the greater 
The 1-year cost of the protection can be calculated by            of  $20,000  or  the  cash  surrender  value  in  the  life  insur-
using Figure 3-1. The premium rate is determined based            ance  contract.  Using  the  facts  presented,  we  can  deter-
on your age on your birthday nearest the beginning of the         mine the cost of the employee’s life insurance protection 
policy year.                                                      as shown in Table 3-1.
                                                                   The employer has included $28 for the cost of the life 
                                                                  insurance  protection  in  the  employee’s  current  year  in-
                                                                  come.  When  figuring  includible  compensation  for  this 
                                                                  year, the employee will subtract $28.

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Table 3-1. Worksheet A. Cost of Incidental Example. Max has been periodically working full-time
Life Insurance for a local hospital since September 2020. Max needs to
figure the limit on annual additions for 2023. The hospital's
Note. Use this worksheet to figure the cost of incidental normal annual work period for employees in Max's gen-
life insurance included in your annuity contract. This eral type of work runs from January to December.
amount will be used to figure includible compensation for During the periods that Max was employed with the
your most recent year of service. hospital, the hospital has always been eligible to provide a
403(b) plan to employees. Additionally, the hospital has
1. Enter the value of the contract (amount
payable upon your death). . . . . . . . . . . 1. $20,000.00 never provided the employees with a 457 deferred com-
pensation plan, a transportation fringe benefit plan, or a
2. Enter the cash value in the contract at the
end of the year. . . . . . . . . . . . . . . . . . 2. 0.00 cafeteria plan.
Max has never worked abroad and there is no life insur-
3. Subtract line 2 from line 1. This is the value ance provided under the plan.
of your current life insurance protection. . . 3. $20,000.00
Table 3-3 shows the service Max provided to the em-
4. Enter your age on your birthday nearest the ployer, compensation for the periods worked, elective de-
beginning of the policy year . . . . . . . . . . 4. 44
ferrals, and taxable wages.
5. Enter the 1-year term premium for $1,000
of life insurance based on your age. (From
Figure 3-1). . . . . . . . . . . . . . . . . . . . . 5. $1.40
Table 3-3. Max’s Compensation
6. Divide line 3 by $1,000. . . . . . . . . . . . . 6. 20
7. Multiply line 6 by line 5. This is the cost of Note. This table shows information Max will use to figure
your incidental life insurance. . . . . . . . . 7. $28.00 includible compensation for the most recent year of
service.
Example 2. The employee’s cash value in the con-
tract at the end of the second year is $1,000. In year 2, the
Years of Taxable Elective
cost of the employee’s life insurance is figured as shown Year
Service Wages Deferrals
in Table 3-2.
6/12 of
In year 2, the employer will include $29.07 in the em- 2023 $42,000 $2,000
ployee’s current year income. The employee will subtract a year
this amount when figuring the includible compensation. 4/12 of
2022 $16,000 $1,650
a year
4/12 of
Table 3-2. Worksheet A. Cost of Incidental 2021 $16,000 $1,650
a year
Life Insurance
Before figuring the limit on annual additions, Max must
Note. Use this worksheet to figure the cost of incidental figure includible compensation for the most recent year of
life insurance included in your annuity contract. This service.
amount will be used to figure includible compensation for Because Max isn’t planning to work the entire 2023
your most recent year of service. year, Max’s most recent year of service will include the
1. Enter the value of the contract (amount time planning to work in 2023 plus time worked in the pre-
payable upon your death). . . . . . . . . . . 1. $20,000.00 ceding 3 years until the time worked for the hospital totals
2. Enter the cash value in the contract at the 1 year. If the total time worked is less than 1 year, Max will
end of the year. . . . . . . . . . . . . . . . . . 2. $1,000.00 treat it as if it were 1 year. Max figures the most recent
3. Subtract line 2 from line 1. This is the value year of service shown in the following list.
of your current life insurance protection. . 3. $19,000.00 6 12
• Time Max will work in 2023 is / of a year.
4. Enter your age on your birthday nearest 4 12
the beginning of the policy year . . . . . . . 4. 45 • Time worked in 2022 is / of a year. All of this time
5. Enter the 1-year term premium for $1,000 will be used to determine Max's most recent year of
of life insurance based on your age. (From service.
Figure 3-1). . . . . . . . . . . . . . . . . . . . 5. $1.53 4 12
• Time worked in 2021 is / of a year. Max only needs
6. Divide line 3 by $1,000. . . . . . . . . . . . . 6. 19 2 months of the 4 months worked in 2021 to have
7. Multiply line 6 by line 5. This is the cost of enough time to total 1 full year. Because Max needs
your incidental life insurance. . . . . . . . . 7. $29.07 only / of the actual time worked, Max will use only /1 2 1 2
of income earned during that period to figure wages
that will be used in figuring the includible compensa-
Figuring Includible Compensation for Your tion.
Most Recent Year of Service
Using the information provided in Table 3-3, wages for
You can use Worksheet B in chapter 9 to deter- Max's most recent year of service are $66,000 ($42,000 +
mine your includible compensation for your most $16,000 + $8,000). Max’s includible compensation for his
recent year of service.

Chapter 3 Limit on Annual Additions Page 9

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                                                                                                                                                                       1
Table 3-4. Worksheet B. Includible Compensation for Your Most Recent Year of Service
           Note. Use this worksheet to figure includible compensation for your most recent year of service.
 1.    Enter your includible wages from the employer maintaining your 403(b) account for your most 
       recent year of service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          1.  $66,000
 2.    Enter elective deferrals excluded from your gross income for your most recent year of 
       service2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2.   4,4753

 3.    Enter amounts contributed or deferred by your employer under a cafeteria plan for your most 
       recent year of service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          3.   -0-
 4.    Enter amounts contributed or deferred by your employer according to your election to your 457 
       account (a nonqualified plan of a state or local government or of a tax-exempt organization) for 
       your most recent year of service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  4.   -0-
 5.    Enter pre-tax contributions (employer's contributions made on your behalf according to your 
       election) to a qualified transportation fringe benefit plan for your most recent year of 
       service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.   -0-
 6.    Enter your foreign earned income exclusion for your most recent year of service . . . . . . . . . . . . .                                                   6.   -0-
 7.    Add lines 1, 2, 3, 4, 5, and 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              7.  70,475
 8.    Enter the cost of incidental life insurance that is part of your annuity contract for your most recent 
       year of service  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      8.   -0-
 9.    Enter compensation that was both:
         • Earned during your most recent year of service, and
         • Earned while your employer wasn’t qualified to maintain a 403(b) plan . . . . . . . . . . . . . . . . . .                                               9.   -0-
 10.   Add lines 8 and 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         10.  -0-
 11.   Subtract line 10 from line 7. This is your includible compensation for your most recent year of 
       service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11. 70,475
1 Use estimated amounts if figuring includible compensation before the end of the year.
2 Elective deferrals made to a designated Roth account aren’t excluded from your gross income and shouldn’t be included on this line.
3 $4,475 ($2,000 + $1,650 + $825).

most  recent  year  of  service  is  figured  as  shown  in Ta- $66,000,  the  lesser  of  the  includible  compensation, 
ble 3-4.                                                        $70,475  (Table  3-4),  and  the  maximum  amount  of 
 After figuring the includible compensation, Max deter-         $66,000.
mines  the  limit  on  annual  additions  for  2023  to  be 

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General Limit
4.
Under the general limit on elective deferrals, the most that
can be contributed to your 403(b) account through a sal-
Limit on Elective ary reduction agreement is $20,500 for 2022 and $22,500
for 2023. This limit applies without regard to community
Deferrals property laws.
The second and final component of MAC is the limit on
elective deferrals. This is a limit on the amount of contribu-
tions that can be made to your account through a salary 15-Year Rule
reduction agreement.
If you have at least 15 years of service with an educational
A salary reduction agreement is an agreement between organization (such as a public or private school), hospital,
you and your employer that allows for a portion of your home health service agency, health and welfare service
compensation to be directly invested in a 403(b) account agency, church, or convention or association of churches
on your behalf. You can enter into more than one salary (or associated organization) and it is allowed by the terms
reduction agreement during a year. of the plan document, the limit on elective deferrals to
your 403(b) account is increased by the least of:
More than one 403(b) account. If, for any year,
! elective deferrals are contributed to more than 1. $3,000;
CAUTION one 403(b) account for you (whether or not with
2. $15,000, reduced by the sum of:
the same employer), you must combine all the elective de-
ferrals to determine whether the total is more than the limit a. The additional pre-tax elective deferrals made in
for that year. prior years because of this rule, plus
b. The aggregate amount of designated Roth contri-
403(b) plan and another retirement plan. If, during the
butions permitted for prior years because of this
year, contributions in the form of elective deferrals are
rule; or
made to other retirement plans on your behalf, you must
combine all of the elective deferrals to determine if they 3. $5,000 times the number of your years of service for
are more than your limit on elective deferrals. The limit on the organization, minus the total elective deferrals
elective deferrals applies to amounts contributed to: made by your employer on your behalf for earlier
years.
• 401(k) plans, to the extent excluded from income;
• Roth contribution programs; If you qualify for the 15-year rule (sometimes referred to
as the “special section 403(b) catch-up” or the
• Section 501(c)(18) plans, to the extent excluded from “years-of-service catch-up”), your elective deferrals under
income; this limit can be as high as $23,500 for 2022 and $25,500
• Savings incentive match plan for employees (SIM- for 2023.
PLE) plans; To determine whether you have 15 years of service
• Salary reduction simplified employee pension (SAR- with your employer, see Years of Service, next.
SEP) plans; and
• All 403(b) plans. Years of Service

Roth contribution program. Your 403(b) plan may al- To determine if you are eligible for the increased limit on
low you to designate all or a portion of your elective defer- elective deferrals, you will first need to figure your years of
rals as Roth contributions. Elective deferrals designated service. How you figure your years of service depends on
as Roth contributions must be maintained in a separate whether you were a full-time or a part-time employee,
Roth account and aren’t excludable from your gross in- whether you worked for the full year or only part of the
come. year, and whether you have worked for your employer for
The maximum amount of contributions allowed under a an entire year.
Roth contribution program is your limit on elective defer- You must figure years of service for each year during
rals, less your elective deferrals not designated as Roth which you worked for the employer who is maintaining
contributions. For more information on the Roth contribu- your 403(b) account.
tion program, see Pub. 560, Retirement Plans for Small
Business. If more than one employer maintains a 403(b) account
for you in the same year, you must figure years of service
Excess elective deferrals. If the amount contributed
separately for each employer.
is more than the allowable limit, you must include the ex-
cess that isn’t a Roth contribution in your gross income for For purposes of the 15-year rule, years of service are
the year contributed. figured through the year for which the calculation is being

Chapter 4 Limit on Elective Deferrals Page 11

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made. For example, to determine the limit for 2021, you Table 4-1. Teacher's Years of Service
count years of service through 2022.
Note. This table shows how the teacher figures the years
Definition of service, as explained in the previous example.

Your years of service are the total number of years you Year Period Worked Portion of Work Years of Service
Period
have worked as a full-time employee for the employer
maintaining your 403(b) account as of the end of the year. 2018 Sept.–Dec. 0.5 year 0.5 year
Feb.–May 0.5 year
2019 1 year
Figuring Your Years of Service Sept.–Dec. 0.5 year
Feb.–May 0.5 year
Take the following rules into account when figuring your 2020 1 year
years of service. Sept.–Dec. 0.5 year
Feb.–May 0.5 year
Status of employer. Your years of service include only 2021 1 year
Sept.–Dec. 0.5 year
periods during which your employer was an eligible em-
Feb.–May 0.5 year
ployer. Your plan administrator can tell you whether or not 2022 1 year
your employer was qualified during all your periods of Sept.–Dec. 0.5 year
service. Total years of service 4.5 years

Service with one employer. Generally, you can’t count Full-time or part-time. To figure your years of service,
service for any employer other than the one who main- you must analyze each year individually and determine
tains your 403(b) account. whether you worked full-time for the full year or something
Church employee. If you are a church employee, other than full-time. When determining whether you
treat all of your years of service with related church organ- worked full-time or something other than full-time, use
izations as years of service with the same employer. For your employer's annual work period as the standard.
more information about church employees, see chapter 5. Employer's annual work period. Your employer's
annual work period is the usual amount of time an individ-
Self-employed ministers. If you are a self-employed
ual working full-time in a specific position is required to
minister, your years of service include full and part years
work. Generally, this period of time is expressed in days,
in which you have been treated as employed by a tax-ex-
weeks, months, or semesters, and can span 2 calendar
empt organization that is an eligible employer.
years.
Total years of service. When figuring prior years of
Note. You can’t accumulate more than 1 year of serv-
service, figure each year individually and then add the in-
ice in a 12-month period.
dividual years of service to determine your total years of
service. Example. All full-time teachers at ABC Public Schools
are required to work both the September through Decem-
Example. The annual work period for full-time teach-
ber semester and the February through May semester.
ers employed by ABC Public Schools is September
Therefore, the annual work period for full-time teachers
through December and February through May. A teacher
employed by ABC Public Schools is September through
began working with ABC Public Schools in September
December and February through May. Teachers at ABC
2018. The teacher has always worked full-time for each
Public Schools who work both semesters in the same cal-
annual work period. At the end of 2022, the teacher had
endar year are considered working a full year of service in
4.5 years of service with ABC Public Schools, as shown in
that calendar year.
Table 4-1.
Full-Time Employee for the Full Year

Count each full year during which you were employed
full-time as 1 year of service. In determining whether you
were employed full-time, compare the amount of work you
were required to perform with the amount of work normally
required of others who held the same position with the
same employer and who generally received most of their
pay from the position.

How to compare. You can use any method that reason-
ably and accurately reflects the amount of work required.
For example, if you are a teacher, you can use the number
of hours of classroom instruction as a measure of the
amount of work required.

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In determining whether positions with the same em- Number of months worked 4 1
ployer are the same, consider all of the facts and circum- Number of months in annual work = 8 = 2
stances concerning the positions, including the work per- period
formed, the methods by which pay is determined, and the
descriptions (or titles) of the positions. Part-time for the full year. If, during a year, you were
employed part-time for the employer's entire annual work
Example. An assistant professor employed in the Eng- period, you figure the fraction for that year as follows.
lish department of a university will be considered a
full-time employee if the amount of work that an assistant • The numerator (top number) is the number of hours or
professor is required to perform is the same as the days you worked.
amount of work normally required of assistant professors • The denominator (bottom number) is the number of
of English at that university who get most of their pay from hours or days normally required of someone holding
that position. the same position who works full-time.
If no one else works for your employer in the same po-
sition, compare your work with the work normally required Example. Alex teaches one course at a local medical
of others who held the same position with similar employ- school 3 hours per week for two semesters. Other faculty
ers or similar positions with your employer. members at the same school teach 9 hours per week for
two semesters. The annual work period of the medical
Full year of service. A full year of service for a particular school is two semesters. An instructor teaching 9 hours a
position means the usual annual work period of anyone week for two semesters is considered a full-time em-
employed full-time in that general type of work at that ployee. Given these facts, Alex has worked part-time for a
place of employment. full annual work period. Alex has completed / of a year of 1 3
service, figured as shown below.
Example. If a doctor works for a hospital 12 months of
a year except for a 1-month vacation, the doctor will be Number of hours worked per week 3 1
considered as employed for a full year if the other doctors
= =
at that hospital also work 11 months of the year with a Number of hours per week considered 9 3
full-time
1-month vacation. Similarly, if the usual annual work pe-
riod at a university consists of the fall and spring semes-
Part-time for part of the year. If, during any year, you
ters, an instructor at that university who teaches these se-
were employed part-time for only part of your employer's
mesters will be considered as working a full year.
annual work period, you figure your fraction for that year
by multiplying two fractions.
Other Than Full-Time for the Figure the first fraction as though you had worked
Full Year full-time for part of the annual work period. The fraction is
as follows.
If, during any year, you were employed full-time for only
part of your employer's annual work period, part-time for • The numerator (top number) is the number of weeks,
the entire annual work period, or part-time for only part of months, or semesters you were a full-time employee.
the work period, your year of service for that year is a frac- • The denominator (bottom number) is the number of
tion of your employer's annual work period. weeks, months, or semesters considered the normal
annual work period for the position.
Full-time for part of the year. If, during a year, you were
employed full-time for only part of your employer's annual Figure the second fraction as though you had worked
work period, figure the fraction for that year as follows. part-time for the entire annual work period. The fraction is
as follows.
• The numerator (top number) is the number of weeks,
months, or semesters you were a full-time employee. • The numerator (top number) is the number of hours or
days you worked.
• The denominator (bottom number) is the number of
weeks, months, or semesters considered the normal • The denominator (bottom number) is the number of
annual work period for the position. hours or days normally required of someone holding
the same position who works full-time.
Example. An instructor was employed full-time by a lo- Once you have figured these two fractions, multiply
cal college for the 4 months of the 2022 spring semester them together to determine the fraction representing your
(February 2022 through May 2022). The annual work pe- partial year of service for the year.
riod for the college is 8 months (February through May
and July through October). Given these facts, the instruc- Example. An attorney teaches a course 3 hours per
tor was employed full-time for part of the annual work pe- week for one semester at a law school. The annual work
riod and provided / of a year of service. The instructor’s 1 2 period for teachers at the school is two semesters. All
years of service computation for 2022 is as follows. full-time instructors at the school are required to teach 12

Chapter 4 Limit on Elective Deferrals Page 13

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hours per week. Based on these facts, the attorney is em- Example
ployed part-time for part of the annual work period. The at-
torney’s year of service for this year is determined by mul- Max has figured the limit on annual additions. The only
tiplying two fractions. The computation is as follows. other component needed before Max can determine its
MAC for 2023 is the limit on elective deferrals.
Attorney’s first fraction
Figuring Max's limit on elective deferrals. Max has
Number of semesters worked 1 been employed with the current employer for less than 15
=
Number of semesters in annual work period 2 years. Max isn’t eligible for the special 15-year increase.
Therefore, the limit on elective deferrals for 2023 is
Attorney's second fraction $22,500, as shown in Table 4-2.
Number of hours worked per week 3 1 Max's employer won’t make any nonelective contribu-
Number of hours per week considered = 12 = 4 tions to the 403(b) account and Max won’t make any af-
full-time ter-tax contributions. Additionally, Max's employer doesn’t
offer a Roth contribution program.
The attorney would multiply these fractions to obtain
the fractional year of service. Figuring Max's MAC

1 1 1 Max has determined that the limit on annual additions for
x = 2023 is $66,000 and the limit on elective deferrals is
2 4 8
$22,500. Because elective deferrals are the only contribu-
tions made to Max's account, the maximum amount that
can be contributed to a 403(b) account on Max's behalf in
Figuring the Limit on Elective 2023 is $22,500, the lesser of both limits.

Deferrals

You can use Part II of Worksheet 1 in chapter 9 to figure
the limit on elective deferrals.

Page 14 Chapter 4 Limit on Elective Deferrals

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Table 4-2. Worksheet 1. Maximum Amount Contributable (MAC)
           Note. Use this worksheet to figure your MAC.

                                        Part I. Limit on Annual Additions
 1. Enter your includible compensation for your most recent year of service                            . . . . . . . . . . . . . . . . . .    1.  $70,475
 2. Maximum:
    •   For 2022, enter $61,000.
    •   For 2023, enter $66,000. . . . . . . . . . . . . . . . . . . . . . . .              . . . . . . . . . . . . . . . . . . . . . . . .   2.  66,000
 3. Enter the lesser of line 1 or line 2. This is your limit on annual additions                       . . . . . . . . . . . . . . . . . . .  3.  66,000
    Caution: If you had only nonelective contributions, skip Part II and enter the amount from line 3 
    on line 18. 
                                       Part II. Limit on Elective Deferrals
 4. Maximum contribution:
    •   For 2022, enter $20,500.
    •   For 2023, enter $22,500. . . . . . . . . . . . . . . . . . . . . . . .              . . . . . . . . . . . . . . . . . . . . . . . .   4.  22,500
    Note. If you have at least 15 years of service with a qualifying organization, complete lines 5 
    through 17. If not, enter zero (-0-) on line 16 and go to line 17.
 5. Amount per year of service           . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5.   5,000
 6. Enter your years of service         . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   6.  
 7. Multiply line 5 by line 6      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7.  
 8. Enter the total of all elective deferrals made for you by the qualifying organization for prior 
    years  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8.  
 9. Subtract line 8 from line 7. If zero or less, enter zero (-0-). . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   9.  -0-
10. Maximum increase in limit for long service                . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10.  15,000
11. Enter the total of additional pre-tax elective deferrals made in prior years under the 15-year 
    rule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11.   
12. Enter the aggregate amount of all designated Roth contributions permitted for prior years under 
    the 15-year rule     . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.   
13. Add lines 11 and 12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         13.   
14. Subtract line 13 from line 10         . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14.   
15. Maximum additional contributions               . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.   3,000
16. Enter the least of line 9, 14, or 15. This is your increase in the limit for long service                          . . . . . . . . . . . 16.  -0-
17. Add lines 4 and 16. This is your limit on elective deferrals. . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    17.  22,500
                                        Part III. Maximum Amount Contributable
18. •   If you had only nonelective contributions, enter the amount from line 3. This is your MAC.
         
    •   If you had only elective deferrals, enter the lesser of line 3 or line 17. This is your MAC.
         
    •   If you had both elective deferrals and nonelective contributions, enter the amount from line 3. 
        This is your MAC. (Use the amount on line 17 to determine if you have excess elective 
        deferrals as explained in chapter 7.). . . . . . . . . . . . . . . . . . . .                 . . . . . . . . . . . . . . . . . . . . 18.  22,500

                                                                                               Chapter 4           Limit on Elective Deferrals    Page 15

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                                                                 Changes to Includible 
5.
                                                                 Compensation for Most Recent 

Ministers and Church                                             Year of Service

Employees                                                        There are two types of changes in determining includible 
                                                                 compensation  for  the  most  recent  year  of  service.  They 
Self-employed ministers and church employees who par-            are:
ticipate in 403(b) plans generally follow the same rules as      •   Changes in how the includible compensation of for-
other 403(b) plan participants.                                      eign missionaries and self-employed ministers is fig-
This means that if you are a self-employed minister or a             ured, and
church employee, your MAC is generally the lesser of:            •   A change to the years that are counted when figuring 
• Your limit on annual additions, or                                 the most recent year of service for church employees 
                                                                     and self-employed ministers.
• Your limit on elective deferrals.

For most ministers and church employees, the limit on an-        Changes to Includible Compensation
nual additions is figured without any changes. This means 
that if you are a minister or church employee, your limit on     Includible  compensation  is  figured  differently  for  foreign 
annual additions is generally the lesser of:                     missionaries and self-employed ministers.

• $61,000 for 2022 and $66,000 for 2023, or                      Foreign  missionary.  If  you  are  a  foreign  missionary, 
• Your includible compensation for your most recent              your includible compensation includes foreign earned in-
  year of service.                                               come that may otherwise be excludable from your gross 
                                                                 income under section 911.
Although,  in  general,  the  same  limit  applies,  church  em- If you are a foreign missionary, and your adjusted gross 
ployees  can  choose  an  alternative  limit  and  there  are    income is $17,000 or less, contributions to your 403(b) ac-
changes in how church employees, foreign missionaries,           count  won’t  be  treated  as  exceeding  the  limit  on  annual 
and  self-employed  ministers  figure  includible  compensa-     additions if the contributions aren’t in excess of $3,000.
tion for the most recent year of service. This chapter will      You are a foreign missionary if you are either a layper-
explain the alternative limit and the changes.                   son or a duly ordained, commissioned, or licensed minis-
Who is a church employee?       A church employee is any-        ter of a church and you meet both of the following require-
one who is an employee of a church or a convention or            ments.
association  of  churches,  including  an  employee  of  a       •   You are an employee of a church or convention or as-
tax-exempt organization controlled by or associated with a           sociation of churches.
church or a convention or association of churches.
                                                                 •   You are performing services for the church outside the 
                                                                     United States.

Alternative Limit for Church                                     Self-employed minister.   If you are a self-employed min-
                                                                 ister, you are treated as an employee of a tax-exempt or-
Employees                                                        ganization  that  is  an  eligible  employer.  Your  includible 
                                                                 compensation is your net earnings from your ministry mi-
If  you  are  a  church  employee,  you  can  choose  to  use    nus the contributions made to the retirement plan on your 
$10,000 a year as your limit on annual additions, even if        behalf and the deductible portion of your self-employment 
your  annual  additions  figured  under  the  general  rule  are tax.
less.
Total contributions over your lifetime under this choice         Changes to Years of Service
can’t be more than $40,000.
                                                                 Generally, only service with the employer who maintains 
                                                                 your  403(b)  account  can  be  counted  when  figuring  your 
                                                                 limit on annual additions.

                                                                 Church  employee. If  you  are  a  church  employee,  treat 
                                                                 all of your years of service as an employee of a church or 
                                                                 a convention or association of churches as years of serv-
                                                                 ice with one employer.

Page 16    Chapter 5 Ministers and Church Employees

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Self-employed minister. If you are a self-employed min- Catch-up contributions aren’t counted against
ister, your years of service include full and part years dur- TIP your MAC. Therefore, the maximum amount that
ing which you were self-employed. you are allowed to have contributed to your
403(b) account is your MAC plus your allowable catch-up
contributions.

You can use Worksheet C in chapter 9 to figure your limit
on catch-up contributions.
6.

Catch-up Contributions

The most that can be contributed to your 403(b) account 7.
is the lesser of your limit on annual additions or your limit
on elective deferrals.
If you will be age 50 or older by the end of the year, you Excess Contributions
may also be able to make additional catch-up contribu-
If your actual contributions (not including catch-up contri-
tions. These additional contributions can’t be made with
butions) are greater than your MAC, you have an excess
after-tax employee contributions.
contribution. Excess contributions can result in income
You are eligible to make catch-up contributions if: tax, additional taxes, and penalties. The effect of excess
contributions depends on the type of excess contribution.
• You will have reached age 50 by the end of the year,
This chapter discusses excess contributions to your
• Your employer's plan document allows for catch-up 403(b) account.
contributions, and
• The maximum amount of elective deferrals that can be
made to your 403(b) account have been made for the How Do I Know if I Have
plan year.
Excess Contributions?
The maximum amount of catch-up contributions is the
lesser of: At the end of the year or the beginning of the next year,
• $6,500 for 2022 and $7,500 for 2023; or you should refigure your MAC based on your actual com-
pensation and actual contributions made to your account.
• The excess of your compensation for the year, over
the elective deferrals that aren’t catch-up contribu- If the actual contributions (not including catch-up contri-
tions. butions) to your account are greater than your MAC, you
have excess contributions. If, at any time during the year,
Figuring catch-up contributions. When figuring allowa- your employment status or your compensation changes,
ble catch-up contributions, combine all catch-up contribu- you should refigure your MAC using a revised estimate of
tions made by your employer on your behalf to the follow- compensation to prevent excess contributions.
ing plans.
• Qualified retirement plans. (To determine if your plan
is a qualified plan, ask your plan administrator.) What Happens if I Have Excess
• 403(b) plans.
Contributions?
• SARSEP plans.
• SIMPLE plans. Certain excess contributions in a 403(b) account can be
corrected. The effect of an excess 403(b) contribution will
The total amount of the catch-up contributions on your depend on the type of excess contribution.
behalf to all plans maintained by your employer can’t be
more than the annual limit. The limit is $6,500 for 2022 Types of excess contributions. If, after checking your
and $7,500 for 2023. actual contributions, you determine that you have an ex-
If you are eligible for both the 15-year rule in- cess, the first thing is to identify the type of excess that
you have. Excess contributions to a 403(b) account are
! crease in elective deferrals and the age 50 categorized as either an:
CAUTION catch-up, allocate amounts first under the 15-year
rule and next as an age 50 catch-up. • Excess annual addition, or
• Excess elective deferral.

Chapter 6 Catch-up Contributions Page 17

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Excess Annual Addition recting distribution of the excess deferral no later than
April 15 of the following year. The plan can distribute the
An excess annual addition is a contribution (not including excess deferral (and any income allocable to the excess)
catch-up contributions) that is more than your limit on an- no later than April 15 of the year following the year the ex-
nual additions. To determine your limit on annual addi- cess deferral was made.
tions, see chapter 3 chapter 5 ( for ministers or church em-
ployees). Note. When April 15 falls on a Saturday, Sunday, or le-
gal holiday, a return is considered timely filed if filed on the
In the year that your contributions are more than your next succeeding day that isn’t a Saturday, Sunday, or le-
limit on annual additions, the excess amount will be inclu- gal holiday.
ded in your income.
Tax treatment of excess deferrals not attributable to
Excise Tax Roth contributions. If the excess deferral is distributed
by April 15, it is included in your income in the year con-
If your 403(b) account invests in mutual funds, and you tributed and the earnings on the excess deferral will be
exceed your limit on annual additions, you may be subject taxed in the year distributed.
to a 6% excise tax on the excess contribution. The excise
Note. When April 15 falls on a Saturday, Sunday, or le-
tax doesn’t apply to funds in an annuity account or to ex-
gal holiday, a return is considered timely filed if filed on the
cess deferrals.
next succeeding day that isn’t a Saturday, Sunday, or le-
You must pay the excise tax each year in which there gal holiday.
are excess contributions in your account. Excess contri-
Tax treatment of excess deferrals attributable to
butions can be corrected by contributing less than the ap-
Roth contributions. For these rules, see Regulations
plicable limit in later years or by making permissible distri-
section 1.402(g)-1(e).
butions. See chapter 8 for a discussion on permissible
distributions.

You can’t deduct the excise tax.

Reporting requirement. You must file Form 5330 if
there has been an excess contribution to a custodial ac- 8.
count and that excess hasn’t been corrected.

Excess Elective Deferral Distributions and

An excess elective deferral is the amount that is more Rollovers
than your limit on elective deferrals. To determine your
limit on elective deferrals, see chapter 4.

Your employer's 403(b) plan may contain language Distributions
permitting it to distribute excess deferrals. If so, it may re-
quire that in order to get a distribution of excess deferrals, Permissible distributions. Generally, a distribution
you either notify the plan of the amount of excess defer- can’t be made from a 403(b) account until the employee:
rals or designate a distribution as an excess deferral. The 1 2
plan may require that the notification or designation be in • Reaches age 59 / ;
writing and may require that you certify or otherwise es- • Has a severance from employment;
tablish that the designated amount is an excess deferral. Dies;
•
A plan isn’t required to permit distribution of excess defer-
rals. • Becomes disabled;
• In the case of elective deferrals, encounters financial
Correction of excess deferrals during year. If you
hardship;
have excess deferrals for a year, a corrective distribution
may be made only if both of the following conditions are • Has a qualified reservist distribution;
satisfied. • Has a qualified birth or adoption distribution; or
• The plan and either you or your employer designate • Has certain distributions of lifetime income invest-
the distribution as an excess deferral to the extent you ments.
have excess deferrals for the year.
• The correcting distribution is made after the date on In most cases, the payments you receive or that are
which the excess deferral was made. made available to you under your 403(b) account are tax-
able in full as ordinary income. In general, the same tax
Correction of excess deferrals after the year. If you rules apply to distributions from 403(b) plans that apply to
have excess deferrals for a year, you may receive a cor- distributions from other retirement plans. These rules are

Page 18 Chapter 8 Distributions and Rollovers

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explained in Pub. 575. Pub. 575 also discusses the addi- No Special 10-Year Tax Option
tional tax on early distributions from retirement plans.
A distribution from a 403(b) plan doesn’t qualify as a
Note. You may choose to have qualified COVID-19 lump-sum distribution. This means you can’t use the spe-
distributions (as defined earlier under Reminders) inclu- cial 10-year tax option to figure the taxable portion of a
ded in income in equal amounts over 3 years. 403(b) distribution. For more information, see Pub. 575.
Retired public safety officers. If you are an eligible re-
tired public safety officer, distributions of up to $3,000,
made directly from your 403(b) plan to pay accident, Transfer of Interest in 403(b)
health, or long-term care insurance, aren’t included in your
taxable income. The premiums can be for you, your Contract
spouse, or your dependents.
A public safety officer is a law enforcement officer, Contract exchanges. If you transfer all or part of your in-
fire fighter, chaplain, or member of a rescue squad or am- terest from a 403(b) contract to another 403(b) contract
bulance crew. (held in the same plan), the transfer is tax free, and is re-
For additional information, see Pub. 575. ferred to as a contract exchange. This was previously
known as a 90-24 transfer. A contract exchange is similar
Distribution for active reservist. The 10% additional to a 90-24 transfer with one major difference. Previously,
tax for early withdrawals won’t apply to a qualified reserv- you were able to accomplish the transfer without your em-
ist distribution attributable to elective deferrals from a ployer’s involvement. After September 24, 2007, all such
403(b) plan. A qualified reservist distribution is a distribu- transfers are accomplished through a contract exchange
tion that is made: requiring your employer’s involvement. In addition, the
plan must provide for the exchange and the transferred in-
• To an individual who is a reservist or national guards-
terest must be subject to the same or stricter distribution
man and who was ordered or called to active duty for
restrictions. Finally, your accumulated benefit after the ex-
a period in excess of 179 days or for an indefinite pe-
change must be equal to what it was before the exchange.
riod, and
Transfers that don’t satisfy this rule are plan distribu-
• During the period beginning on the date of the order or tions and are generally taxable as ordinary income.
call to duty and ending at the close of the active duty
period. Plan-to-plan transfers. You may also transfer part or all
of your interest from a 403(b) plan to another 403(b) plan
Note. The 10% additional tax on qualified COVID-19 if you are an employee of (or were formerly employed by)
distributions (as defined earlier under Reminders) up to the employer of the plan to which you would like to trans-
$100,000 is waived for 2020. fer. Both the initial plan and the receiving plan must pro-
vide for transfers. Your accumulated benefit after the
Minimum Required Distributions transfer must be at least equal to what it was before the
transfer. The new plan’s restrictions on distributions must
You must receive all, or at least a certain minimum, of be the same or stricter than those of the original plan.
your interest accruing after 1986 in the 403(b) plan by
April 1 of the calendar year following the later of the calen- Tax-free transfers for certain cash distributions. A
dar year in which you become age 72 (if you attain age tax-free transfer may also apply to a cash distribution of
70 / after December 31, 2019), or the calendar year in 1 2 your 403(b) account from an insurance company that is
which you retire. subject to a rehabilitation, conservatorship, insolvency, or
similar state proceeding. To receive tax-free treatment,
Check with your employer, plan administrator, or you must do all of the following.
TIP provider to find out whether this rule also applies
to pre-1987 accruals. If not, a minimum amount of • Withdraw all the cash to which you are entitled in full
these accruals must begin to be distributed by the later of settlement of your contract rights or, if less, the maxi-
the end of the calendar year in which you reach age 75 or mum permitted by the state.
April 1 of the calendar year following retirement. For each • Reinvest the cash distribution in a single policy or con-
year thereafter, the minimum distribution must be made by tract issued by another insurance company or in a sin-
the last day of the year. If you don’t receive the required gle custodial account subject to the same or stricter
minimum distribution, you are subject to a nondeductible distribution restrictions as the original contract not
50% excise tax on the difference between the required later than 60 days after you receive the cash distribu-
minimum distribution and the amount actually distributed. tion.
• Assign all future distribution rights to the new contract
or account for investment in that contract or account if
you received an amount that is less than what you are
entitled to because of state restrictions.

Chapter 8 Distributions and Rollovers Page 19

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In addition to the preceding requirements, you must
provide the new insurer with a written statement contain-
ing all of the following information. Tax-Free Rollovers

• The gross amount of cash distributed under the old You can generally roll over tax free all or any part of a dis-
contract. tribution from a 403(b) plan to a traditional IRA or a
• The amount of cash reinvested in the new contract. non-Roth eligible retirement plan, except for any nonquali-
fying distributions, described later. You may also roll over
• Your investment in the old contract on the date you re- any part of a distribution from a 403(b) plan by converting
ceive your first cash distribution. it through a direct rollover, described below, to a Roth
Also, you must attach the following items to your timely IRA. Conversion amounts are generally includible in your
filed income tax return in the year you receive the first dis- taxable income in the year of the distribution from your
tribution of cash. 403(b) account. See Pub. 590-A for more information
about conversion into a Roth IRA.
1. A copy of the statement you gave the new insurer.
2. A statement that includes: Note. A participant is required to roll over distribution
amounts received within 60 calendar days in order for the
a. The words ELECTION UNDER REV. PROC. amount to be treated as nontaxable. Distribution amounts
92-44, that are rolled over within the 60 days aren’t subject to the
b. The name of the company that issued the new 10% additional tax on early distributions.
contract, and
Note. The repayment of a qualified birth or adoption
c. The new policy number. distribution (as defined earlier under Reminders) to an eli-
gible retirement plan (other than a defined benefit plan) is
Direct trustee-to-trustee transfer. If you make a direct treated as a direct transfer of the distribution to the plan
trustee-to-trustee transfer from your governmental 403(b) within 60 days of the distribution.
account to a defined benefit governmental plan, it may not
be includible in gross income. Note. The 10% additional tax on qualified COVID-19
The transfer amount isn’t includible in gross income if it distributions (as defined earlier under Reminders) up to
is made to: $100,000 is waived for 2020.

• Purchase permissive service credits; or Rollovers to and from 403(b) plans. You can generally
• Repay contributions and earnings that were previously roll over tax free all or any part of a distribution from an eli-
refunded under a forfeiture of service credit under the gible retirement plan to a 403(b) plan. Beginning January
plan, or under another plan maintained by a state or 1, 2008, distributions from tax-qualified retirement plans
local government employer within the same state. and tax-sheltered annuities can be converted by making a
direct rollover into a Roth IRA subject to the restrictions
After-tax contributions. For distributions beginning that currently apply to rollovers from a traditional IRA into
after December 31, 2006, after-tax contributions can be a Roth IRA. Converted amounts are generally includible in
rolled over between a 403(b) plan and a defined benefit your taxable income in the year of the distribution from
plan, an IRA, or a defined contribution plan. If the rollover your 403(b) account. See Pub. 590-A for more information
is to or from a 403(b) plan, it must occur through a direct on conversion into a Roth IRA.
trustee-to-trustee transfer. If a distribution includes both pre-tax contributions and
Permissive service credit. A permissive service after-tax contributions, the portion of the distribution that is
credit is credit for a period of service recognized by a de- rolled over is treated as consisting first of pre-tax amounts
fined benefit governmental plan only if you voluntarily con- (contributions and earnings that would be includible in in-
tribute to the plan an amount that doesn’t exceed the come if no rollover occurred). This means that if you roll
amount necessary to fund the benefit attributable to the over an amount that is at least as much as the pre-tax por-
period of service and the amount contributed is in addition tion of the distribution, you don’t have to include any of the
to the regular employee contribution, if any, under the distribution in income.
plan. For more information on rollovers and eligible retire-
A permissive service credit may also include service ment plans, see Pub. 575.
credit for up to 5 years where there is no performance of If you roll over money or other property from a
service, or service credited to provide an increased bene- ! 403(b) plan to an eligible retirement plan, see
fit for service credit which a participant is receiving under CAUTION Pub. 575 for information about possible effects on
the plan. later distributions from the eligible retirement plan.
Check with your plan administrator as to the type and
extent of service that may be purchased by this transfer.
Hardship exception to rollover rules. The IRS may
waive the 60-day rollover period if the failure to waive
such requirement would be against equity or good con-
science, including cases of casualty, disaster, or other
events beyond the reasonable control of an individual.

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Ways to get a waiver of the 60-day rollover re- the IRS will consider all of the relevant facts and circum-
quirement. There are three ways to obtain a waiver of stances, including:
the 60-day rollover requirement. Whether errors were made by the financial institution,
•
• You qualify for an automatic waiver. that is, the plan administrator, or IRA trustee, issuer, or
custodian;
• You self-certify that you met the requirements of a
waiver. • Whether you were unable to complete the rollover
within the 60-day period due to death, disability, hos-
• You request and receive a private letter ruling granting
pitalization, incarceration, serious illness, restrictions
a waiver.
imposed by a foreign country, or postal error;
How do you qualify for an automatic waiver? You Whether you used the amount distributed; and
•
qualify for an automatic waiver if all of the following apply.
• How much time has passed since the date of the dis-
• The financial institution receives the funds on your be- tribution.
half before the end of the 60-day rollover period.
• You followed all of the procedures set by the financial Note. The IRS can waive only the 60-day rollover re-
institution for depositing the funds into an IRA or other quirement and not the other requirements for a valid roll-
eligible retirement plan within the 60-day rollover pe- over contribution.
riod (including giving instructions to deposit the funds For more information on waivers of the 60-day rollover
into a plan or IRA). requirement, go to IRS.gov/Retirement-Plans/Retirement-
Plans-FAQS-Relating-to-Waivers-of-the-60-Day-Rollover-
• The funds are not deposited into a plan or IRA within Requirement.
the 60-day rollover period solely because of an error
on the part of the financial institution. Eligible retirement plans. The following are consid-
ered eligible retirement plans.
• The funds are deposited into a plan or IRA within 1
year from the beginning of the 60-day rollover period. • IRAs.
• It would have been a valid rollover if the financial insti- • Roth IRAs.
tution had deposited the funds as instructed. • 403(a) annuity plans.
If you do not qualify for an automatic waiver, you can use • 403(b) plans.
the self-certification procedure to make a late rollover con-
tribution or you can apply to the IRS for a waiver of the • Government eligible 457 plans.
60-day rollover requirement. • Qualified retirement plans.
How do you self-certify that you qualify for a If the distribution is from a designated Roth account, then
waiver? Based on Revenue Procedure 2016-47, the only eligible retirement plan is another designated
2016-37 I.R.B. 346, available at IRS.gov/irb/2016-37_IRB/ Roth account or a Roth IRA.
ar09.html, you may make a written certification to a plan
administrator or an IRA trustee that you missed the 60-day
Nonqualifying distributions. You can’t roll over tax
rollover contribution deadline because of one or more of
free:
the 11 reasons listed in Revenue Procedure 2016-47. A
plan administrator or an IRA trustee may rely on the certifi- • Minimum required distributions (generally required to
cation in accepting and reporting receipt of the rollover begin at age 72 if you attain age 70 / after December 1 2
contribution. You may make the certification by using the 31, 2019);
model letter in the appendix to the revenue procedure or • Substantially equal payments over your life or life ex-
by using a letter that is substantially similar. There is no pectancy;
IRS fee for self certification. A copy of the certification
should be kept in your files and be available if requested • Substantially equal payments over the joint lives or life
on audit. expectancies of your beneficiary and you;
For additional information on rollovers, see Pub. 590-A. • Substantially equal payments for a period of 10 years
How do you apply for a waiver ruling and what is or more;
the fee? You can request a ruling according to the proce- • Hardship distributions; or
dures outlined in Revenue Procedure 2003-16, as modi- Corrective distributions of excess contributions or ex-
•
fied by Revenue Procedure 2016-47 and Revenue Proce- cess deferrals, and any income allocable to the ex-
dure 2020-46; and Revenue Procedure 2023-4. See cess, or excess annual additions and any allocable
Appendix A for the applicable user fee. gains.
How does the IRS determine whether to grant a
waiver in a private letter ruling? In determining Rollover of nontaxable amounts. You may be able to
whether to issue a favorable letter ruling granting a waiver, roll over the nontaxable part of a distribution (such as your
after-tax contributions) made to another eligible retirement
plan, traditional IRA, or Roth IRA. The transfer must be
made either through a direct rollover to an eligible plan

Chapter 8 Distributions and Rollovers Page 21

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that separately accounts for the taxable and nontaxable all of the rollover rules apply to you as if you were the em-
parts of the rollover or through a rollover to a traditional ployee. You can roll over your interest in the plan to a tra-
IRA or Roth IRA. ditional IRA or another 403(b) plan. For more information
If you roll over only part of a distribution that includes on the treatment of an interest received under a QDRO,
both taxable and nontaxable amounts, the amount you roll see Pub. 575.
over is treated as coming first from the taxable part of the
distribution. Spouses of deceased employees. If you are the
spouse of a deceased employee, you can roll over the
Direct rollovers of 403(b) plan distributions. You qualifying distribution attributable to the employee. You
have the option of having your 403(b) plan make the roll- can make the rollover to any eligible retirement plan.
over directly to a traditional IRA, Roth IRA, or new plan. After you roll money and other property over from a
Before you receive a distribution, your plan will give you 403(b) plan to an eligible retirement plan, and you take a
information on this. It is generally to your advantage to distribution from that plan, you won’t be eligible to receive
choose this option because your plan won’t withhold tax the capital gain treatment or the special averaging treat-
on the distribution if you choose it. ment for the distribution.
Distribution received by you. If you receive a distribu- Second rollover. If you roll over a qualifying distribu-
tion that qualifies to be rolled over, you can roll over all or tion to a traditional IRA, you can, if certain conditions are
any part of the distribution. Generally, you will receive only satisfied, later roll the distribution into another 403(b) plan.
80% of the distribution because 20% must be withheld. If For more information, see IRA as a holding account (con-
you roll over only the 80% you receive, you must pay tax duit IRA) for rollovers to other eligible plans in chapter 1 of
on the 20% you didn’t roll over. You can replace the 20% Pub. 590-A.
that was withheld with other money within the 60-day pe-
Nonspouse beneficiary. A nonspouse beneficiary may
riod to make a 100% rollover.
make a direct rollover of a distribution from a 403(b) plan
Voluntary deductible contributions. For tax years of a deceased participant if the rollover is a direct transfer
1982 through 1986, employees could make deductible to an inherited IRA established to receive the distribution.
contributions to a 403(b) plan under the IRA rules instead If the rollover is a direct trustee-to-trustee transfer to an
of deducting contributions to a traditional IRA. IRA established to receive the distribution:
If you made voluntary deductible contributions to a • The transfer will be treated as an eligible rollover dis-
403(b) plan under these traditional IRA rules, the distribu- tribution,
tion of all or part of the accumulated deductible contribu-
tions may be rolled over if it otherwise qualifies as a distri- • The IRA will be considered an inherited account, and
bution you can roll over. Accumulated deductible • The required minimum distribution rules that apply in
contributions are the deductible contributions: instances where the participant dies before the entire
• Plus interest is distributed will apply to the transferred IRA.
For more information on IRAs, see Pubs. 590-A and
1. Income allocable to the contributions,
590-B.
2. Gain allocable to the contributions, and
Frozen deposits. The 60-day period usually allowed for
• Minus completing a rollover is extended for any time that the
1. Expenses and losses allocable to the contribu- amount distributed is a frozen deposit in a financial institu-
tions; and tion. The 60-day period can’t end earlier than 10 days af-
ter the deposit ceases to be a frozen deposit.
2. Distributions from the contributions, income, or A frozen deposit is any deposit that on any day during
gain. the 60-day period can’t be withdrawn because:
Excess employer contributions. The portion of a distri- 1. The financial institution is bankrupt or insolvent, or
bution from a 403(b) plan transferred to a traditional IRA
2. The state where the institution is located has placed
that was previously included in income as excess em-
limits on withdrawals because one or more banks in
ployer contributions isn’t an eligible rollover distribution.
the state are (or are about to be) bankrupt or insol-
Its transfer doesn’t affect the rollover treatment of the
vent.
eligible portion of the transferred amounts. However, the
ineligible portion is subject to the traditional IRA contribu-
tion limits and may create an excess IRA contribution sub-
ject to a 6% excise tax. See chapter 1 of Pub. 590-A. Gift Tax

Qualified domestic relations order (QDRO). You may If, by choosing or not choosing an election, or option, you
be able to roll over tax free all or any part of an eligible roll- provide an annuity for your beneficiary at or after your
over distribution from a 403(b) plan that you receive under death, you may have made a taxable gift equal to the
a QDRO. If you receive the interest in the 403(b) plan as value of the annuity.
an employee's spouse or former spouse under a QDRO,

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Joint and survivor annuity.     If the gift is an interest in a 
joint and survivor annuity where only you and your spouse 
have the right to receive payments, the gift will generally       When Should I Figure MAC?
be  treated  as  qualifying  for  the  unlimited  marital  deduc-
tion.                                                             At  the  beginning  of  each  year,  you  should  figure  your 
                                                                  MAC  using  a  conservative  estimate  of  your  compensa-
More  information. For  information  on  the  gift  tax,  see     tion.  Should  your  income  change  during  the  year,  you 
Pub. 559, Survivors, Executors, and Administrators.               should refigure your MAC based on a revised conserva-
                                                                  tive estimate. By doing this, you will be able to determine if 
                                                                  contributions to your 403(b) account should be increased 
                                                                  or decreased for the year.

                                                                  Checking the Previous Year's 
9.                                                                Contributions

                                                                  At the beginning of the following year, you should refigure 
Worksheets                                                        your MAC based on your actual earned income.
Chapter 2 introduced you to the term “maximum amount               At the end of the current year or the beginning of the 
contributable” (MAC). Generally, your MAC is the lesser of        next year, you should check your contributions to be sure 
your:                                                             you didn’t exceed your MAC. This means refiguring your 
                                                                  limit  based  on  your  actual  compensation  figures  for  the 
•  Limit on annual additions (chapter 3), or                      year. This will allow you to determine if the amount con-
•  Limit on elective deferrals (chapter 4).                       tributed is more than the allowable amounts, and possibly 
                                                                  avoid additional taxes.
The  worksheets  in  this  chapter  can  help  you  figure  the 
cost of incidental life insurance, your includible compen-
sation, your limit on annual additions, your limit on elective    Available Worksheets
deferrals,  your  limit  on  catch-up  contributions,  and  your 
                                                                  The following worksheets have been provided to help you 
MAC.
                                                                  figure your MAC.
      After  completing  the  worksheets,  you  should 
      maintain  them  with  your  403(b)  records  for  that      • Worksheet A. Cost of Incidental Life Insurance.
      year. Do not attach them to your tax return. At the         • Worksheet B. Includible Compensation for Your Most 
end  of  the  year  or  the  beginning  of  the  next  year,  you   Recent Year of Service.
should  compare  your  estimated  compensation  figures             Worksheet C. Limit on Catch-up Contributions.
                                                                  •
with your actual figures.
                                                                  • Worksheet 1. Maximum Amount Contributable (MAC).
If  your  compensation  is  the  same  as,  or  more  than,  the 
projected amounts and the calculations are correct, then 
you  should  simply  file  these  worksheets  with  your  other 
tax records for the year.
If your compensation was lower than your estimated fig-
ures, you will need to check the amount contributed dur-
ing  the  year  to  determine  if  contributions  are  more  than 
your MAC.
Worksheet A. Cost of Incidental Life Insurance
         Note. Use this worksheet to figure the cost of incidental life insurance included in your annuity contract. 
         This amount will be used to figure includible compensation for your most recent year of service.
1.    Enter the value of the contract (amount payable upon your death) . . . . . . . . . . . . . . . . . . . . . . . . .                                           1.  
2.    Enter the cash value in the contract at the end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                  2.  
3.    Subtract line 2 from line 1. This is the value of your current life insurance protection . . . . . . . . . . .                                               3.  
4.    Enter your age on your birthday nearest the beginning of the policy year . . . . . . . . . . . . . . . . . . . .                                             4.  
5.    Enter the 1-year term premium for $1,000 of life insurance based on your age. (From Figure 
      3-1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.  
6.    Divide line 3 by $1,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            6.  
7.    Multiply line 6 by line 5. This is the cost of your incidental life insurance . . . . . . . . . . . . . . . . . . . . .                                      7.  

                                                                                  Chapter 9                                                                        Worksheets    Page 23

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                                                                                                                                                             1
Worksheet B. Includible Compensation for Your Most Recent Year of Service
              Note. Use this worksheet to figure includible compensation for your most recent year of service.
  1. Enter your includible wages from the employer maintaining your 403(b) account for your most 
     recent year of service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           1.  
  2. Enter elective deferrals excluded from your gross income for your most recent year of 
     service2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2.  
  3. Enter amounts contributed or deferred by your employer under a cafeteria plan for your most 
     recent year of service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           3.  
  4. Enter amounts contributed or deferred by your employer according to your election to your 457 
     account (a nonqualified plan of a state or local government or of a tax-exempt organization) for 
     your most recent year of service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   4.  
  5. Enter pre-tax contributions (employer's contributions made on your behalf according to your 
     election) to a qualified transportation fringe benefit plan for your most recent year of 
     service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5.  
  6. Enter your foreign earned income exclusion for your most recent year of service . . . . . . . . . . .                                                    6.  
  7. Add lines 1, 2, 3, 4, 5, and 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               7.  
  8. Enter the cost of incidental life insurance that is part of your annuity contract for your most 
     recent year of service  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            8.  
  9. Enter compensation that was both:
     • Earned during your most recent year of service, and
     • Earned while your employer wasn’t qualified to maintain a 403(b) plan . . . . . . . . . . . . . . . .                                                  9.  
 10. Add lines 8 and 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         10.  
 11. Subtract line 10 from line 7. This is your includible compensation for your most recent year of 
     service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.  
1 Use estimated amounts if figuring includible compensation before the end of the year.
2 Elective deferrals made to a designated Roth account aren’t excluded from your gross income and shouldn’t be included on this line.

Worksheet C. Limit on Catch-up Contributions
              Note. If you will be age 50 or older by the end of the year, use this worksheet to figure your limit on 
              catch-up contributions.
 1. Maximum catch-up contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   1.    $7,500
 2. Enter your includible compensation for your most recent year of service  . . . . . . . . . . . . . . . . . . . .                                         2.    
 3. Enter your elective deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            3.    
 4. Subtract line 3 from line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          4.    
 5. Enter the lesser of line 1 or line 4. This is your limit on catch-up contributions . . . . . . . . . . . . . . . .                                       5.    

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Worksheet 1. Maximum Amount Contributable (MAC)
               Note. Use this worksheet to figure your MAC.

                                       Part I. Limit on Annual Additions
  1. Enter your includible compensation for your most recent year of service                           . . . . . . . . . . . . . . . . .      1.      
  2. Maximum:1
     •   For 2022, enter $61,000.
     •   For 2023, enter $66,000. . . . . . . . . . . . . . . . . . . . . . . .            . . . . . . . . . . . . . . . . . . . . . . . .    2.      
  3. Enter the lesser of line 1 or line 2. This is your limit on annual additions                      . . . . . . . . . . . . . . . . . .    3.      
     Caution: If you had only nonelective contributions, skip Part II and enter the amount from line 3 
     on line 18. 
                                       Part II. Limit on Elective Deferrals
  4. Maximum contribution:
     •   For 2022, enter $20,500.
     •   For 2023, enter $22,500. . . . . . . . . . . . . . . . . . . . . . . .            . . . . . . . . . . . . . . . . . . . . . . . .    4.      
     Note. If you have at least 15 years of service with a qualifying organization, complete lines 5 
     through 17. If not, enter zero (-0-) on line 16 and go to line 17.
  5. Amount per year of service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              5.     $ 5,000
  6. Enter your years of service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             6.  
  7. Multiply line 5 by line 6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         7.  
  8. Enter the total of all elective deferrals made for you by the qualifying organization for prior 
     years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    8.  
  9. Subtract line 8 from line 7. If zero or less, enter zero (-0-)                . . . . . . . . . . . . . . . . . . . . . . . . . . . .    9.      
 10. Maximum increase in limit for long service                . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   10.     $15,000
 11. Enter the total of additional pre-tax elective deferrals made in prior years under the 15-year 
     rule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.      
 12. Enter the aggregate amount of all designated Roth contributions permitted for prior years under 
     the 15-year rule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       12.      
 13. Add line 11 and line 12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          13.      
 14. Subtract line 13 from line 10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            14.      
 15. Maximum additional contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 15.     $ 3,000
 16. Enter the least of line 9, 14, or 15. This is your increase in the limit for long service. . . . . . . . . .                            16.      
 17. Add lines 4 and 16. This is your limit on elective deferrals                  . . . . . . . . . . . . . . . . . . . . . . . . . . . .   17.      
                                       Part III. Maximum Amount Contributable
 18. •   If you had only nonelective contributions, enter the amount from line 3. This is your MAC.
          
     •   If you had only elective deferrals, enter the lesser of line 3 or line 17. This is your MAC.
          
     •   If you had both elective deferrals and nonelective contributions, enter the amount from 
         line 3. This is your MAC. (Use the amount on line 17 to determine if you have excess 
         elective deferrals as explained in chapter 7.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   18.      
1 If you participate in a 403(b) plan and a qualified plan, you must combine contributions made to your 403(b) account with contributions to a 
qualified plan and simplified employee pension plans of all corporations, partnerships, and sole proprietorships in which you have more than 50% 
control. You must also combine the contributions made to all 403(b) accounts on your behalf by your employer.

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• Foreign housing costs,
• Income for bona fide residents of American Samoa,
10. Guam, or the Northern Mariana Islands, and
• Income from Puerto Rico.

Retirement Savings Eligible contributions. These include:
Contributions Credit 1. Contributions to a traditional or Roth IRA;
2. Elective deferrals, including amounts designated as
(Saver's Credit) after-tax Roth contributions, to:
If you or your employer makes eligible contributions (de- a. A 401(k) plan (including a SIMPLE 401(k) plan),
fined later) to a retirement plan, you may be able to take a b. A section 403(b) annuity,
credit of up to $2,000 (up to $4,000 if filing jointly). This
credit could reduce the federal income tax you pay dollar c. An eligible deferred compensation plan of a state
for dollar. or local government (a governmental 457 plan),
d. A SIMPLE IRA plan, or
Can you claim the credit? If you or your employer
makes eligible contributions to a retirement plan, you can e. A salary reduction SEP;
claim the credit if all of the following apply. 3. Contributions to a section 501(c)(18) plan; and
1. You aren’t under age 18. 4. ABLE account contributions by the designated benefi-
2. You aren’t a full-time student (explained next). ciary as defined by section 529A.
3. No one else, such as your parent(s), claims an ex- They also include voluntary after-tax employee contribu-
emption for you on their tax return. tions to a tax-qualified retirement plan or a section 403(b)
annuity. For purposes of the credit, an employee contribu-
4. Your adjusted gross income (defined later) isn’t more tion will be voluntary as long as it isn’t required as a condi-
than: tion of employment.
a. $68,000 for 2022 ($73,000 for 2023) if your filing
status is married filing jointly; Reducing eligible contributions. Reduce your eligible
contributions (but not below zero) by the total distributions
b. $51,000 for 2022 ($54,750 for 2023) if your filing you received during the testing period (defined later) from
status is head of household (with qualifying per- any IRA, plan, or annuity included earlier under Eligible
son); or contributions. Also, reduce your eligible contributions by
c. $34,000 for 2022 ($36,500 for 2023) if your filing any distribution from a Roth IRA that isn’t rolled over, even
status is single, married filing separately, or quali- if the distribution isn’t taxable.
fying widow(er) with dependent child. Do not reduce your eligible contributions by any of the
following.
Full-time student. You are a full-time student if, dur-
ing some part of each of 5 calendar months (not necessa- 1. The portion of any distribution which isn’t includible in
rily consecutive) during the calendar year, you are either: income because it is a trustee-to-trustee transfer or a
rollover distribution.
• A full-time student at a school that has a regular
teaching staff, course of study, and regularly enrolled 2. Distributions that are taxable as the result of an
body of students in attendance; or in-plan rollover to your designated Roth account.
• A student taking a full-time, on-farm training course 3. Any distribution that is a return of a contribution to an
given by either a school that has a regular teaching IRA (including a Roth IRA) made during the year for
staff, course of study, and regularly enrolled body of which you claim the credit if:
students in attendance; or a state, county, or local a. The distribution is made before the due date (in-
government. cluding extensions) of your tax return for that year,
You are a full-time student if you are enrolled for the num- b. You don’t take a deduction for the contribution,
ber of hours or courses the school considers to be and
full-time.
c. The distribution includes any income attributable
Adjusted gross income. This is generally the amount to the contribution.
on line 11 of your 2022 Form 1040 or 1040-SR. For purpo-
ses of this section, adjusted gross income shall be deter- 4. Loans from a qualified employer plan treated as a dis-
mined without regard to sections 911, 931, and 933. You tribution.
must add to that amount any exclusion or deduction from 5. Distributions of excess contributions or deferrals (and
gross income claimed for the year for: income attributable to excess contributions and
• Foreign earned income, deferrals).

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6. Distributions of dividends paid on stock held by an             The maximum contribution taken into account is $2,000 
  employee stock ownership plan under section 404(k).              per person. On a joint return, up to $2,000 is taken into ac-
                                                                   count for each spouse.
7. Distributions from an eligible retirement plan that are 
                                                                   Figure  the  credit  on  Form  8880.  Report  the  credit  on 
  converted or rolled over to a Roth IRA.
                                                                   line  4  of  your  2022  Schedule  3  (Form  1040)  and  attach 
8. Distributions from a military retirement plan.                  Form 8880 to your return.
9. Distributions from an inherited IRA by a nonspousal 
  beneficiary.
                                                                   11. How To Get Tax Help
Distributions received by spouse.     Any distributions 
your spouse receives are treated as received by you if you         If you have questions about a tax issue; need help prepar-
file a joint return with your spouse both for the year of the      ing your tax return; or want to download free publications, 
distribution and for the year for which you claim the credit.      forms, or instructions, go to IRS.gov to find resources that 
Testing period.   The testing period consists of:                  can help you right away.

• The year in which you claim the credit,                          Preparing and filing your tax return. After receiving all 
• The 2 years before the year in which you claim the               your wage and earnings statements (Forms W-2, W-2G, 
  credit, and                                                      1099-R,  1099-MISC,  1099-NEC,  etc.);  unemployment 
                                                                   compensation statements (by mail or in a digital format) or 
• The period after the end of the year in which you claim          other  government  payment  statements  (Form  1099-G); 
  the credit and before the due date of the return (in-            and  interest,  dividend,  and  retirement  statements  from 
  cluding extensions) for filing your return for the year in       banks and investment firms (Forms 1099), you have sev-
  which you claimed the credit.                                    eral options to choose from to prepare and file your tax re-
                                                                   turn.  You  can  prepare  the  tax  return  yourself,  see  if  you 
Example. You  and  your  spouse  filed  joint  returns  in 
                                                                   qualify for free tax preparation, or hire a tax professional to 
2020 and 2021, and plan to do so in 2022 and 2023. You 
                                                                   prepare your return.
received  a  taxable  distribution  from  a  qualified  plan  in 
2020  and  a  taxable  distribution  from  an  eligible  section   Free options for tax preparation.    Go to IRS.gov to see 
457(b) deferred compensation plan in 2021. Your spouse             your options for preparing and filing your return online or 
received taxable distributions from a Roth IRA in 2022 and         in your local community, if you qualify, which include the 
tax-free distributions from a Roth IRA in 2023 before April        following.
15. You made eligible contributions to an IRA in 2022 and 
you otherwise qualify for this credit. You must reduce the         • Free File. This program lets you prepare and file your 
amount of your qualifying contributions in 2022 by the total         federal individual income tax return for free using 
of the distributions you and your spouse received in 2020,           brand-name tax-preparation-and-filing software or 
2021, 2022, and 2023.                                                Free File fillable forms. However, state tax preparation 
                                                                     may not be available through Free File. Go to IRS.gov/
Maximum  eligible  contributions.     After  your  contribu-         FreeFile to see if you qualify for free online federal tax 
tions  are  reduced,  the  maximum  annual  contribution  on         preparation, e-filing, and direct deposit or payment op-
which you can base the credit is $2,000 per person.                  tions.
Effect on other credits. The amount of this credit won’t           • VITA. The Volunteer Income Tax Assistance (VITA) 
                                                                     program offers free tax help to people with 
change  the  amount  of  your  refundable  tax  credits.  A  re-
                                                                     low-to-moderate incomes, persons with disabilities, 
fundable tax credit, such as the earned income credit or 
                                                                     and limited-English-speaking taxpayers who need 
the additional child tax credit, is an amount that you would 
                                                                     help preparing their own tax returns. Go to IRS.gov/
receive as a refund even if you didn’t otherwise owe any 
                                                                     VITA, download the free IRS2Go app, or call 
taxes.
                                                                     800-906-9887 for information on free tax return prepa-
Maximum  credit.  This  is  a  nonrefundable  credit.  The           ration.
amount  of  the  credit  in  any  year  can’t  be  more  than  the • TCE. The Tax Counseling for the Elderly (TCE) pro-
amount of tax that you would otherwise pay (not counting             gram offers free tax help for all taxpayers, particularly 
any refundable credits or the adoption credit) in any year.          those who are 60 years of age and older. TCE volun-
If your tax liability is reduced to zero because of other non-       teers specialize in answering questions about pen-
refundable  credits,  such  as  the  education  credits,  then       sions and retirement-related issues unique to seniors. 
you won’t be entitled to this credit.                                Go to IRS.gov/TCE, download the free IRS2Go app, 
                                                                     or call 888-227-7669 for information on free tax return 
How to figure and report the credit.  The amount of the              preparation.
credit you can get is based on the contributions you make 
and your credit rate. The credit rate can be as low as 10%         • MilTax. Members of the U.S. Armed Forces and 
or as high as 50%. Your credit rate depends on your in-              qualified veterans may use MilTax, a free tax service 
come and your filing status. See Form 8880 to determine              offered by the Department of Defense through Military 
your credit rate.                                                    OneSource. For more information, go to 
                                                                     MilitaryOneSource MilitaryOneSource.mil/Tax (       ).

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Also, the IRS offers Free Fillable Forms, which can more information on how to choose a tax preparer, go to
be completed online and then filed electronically re- Tips for Choosing a Tax Preparer on IRS.gov.
gardless of income.
Coronavirus. Go to IRS.gov/Coronavirus for links to in-
Using online tools to help prepare your return. Go to formation on the impact of the coronavirus, as well as tax
IRS.gov/Tools for the following. relief available for individuals and families, small and large
businesses, and tax-exempt organizations.
• The Earned Income Tax Credit Assistant IRS.gov/ (
EITCAssistant) determines if you’re eligible for the Employers can register to use Business Services On-
earned income credit (EIC). line. The Social Security Administration (SSA) offers on-
• The Online EIN Application IRS.gov/EIN ( ) helps you line service at SSA.gov/employer for fast, free, and secure
get an employer identification number (EIN) at no online W-2 filing options to CPAs, accountants, enrolled
cost. agents, and individuals who process Form W-2, Wage
and Tax Statement, and Form W-2c, Corrected Wage and
• The Tax Withholding Estimator IRS.gov/W4app ( )
Tax Statement.
makes it easier for you to estimate the federal income
tax you want your employer to withhold from your pay- IRS social media. Go to IRS.gov/SocialMedia to see the
check. This is tax withholding. See how your withhold- various social media tools the IRS uses to share the latest
ing affects your refund, take-home pay, or tax due. information on tax changes, scam alerts, initiatives, prod-
• The First-Time Homebuyer Credit Account Look-up ucts, and services. At the IRS, privacy and security are
(IRS.gov/HomeBuyer) tool provides information on our highest priority. We use these tools to share public in-
your repayments and account balance. formation with you. Don’t post your social security number
(SSN) or other confidential information on social media
• The Sales Tax Deduction Calculator IRS.gov/ ( sites. Always protect your identity when using any social
SalesTax) figures the amount you can claim if you networking site.
itemize deductions on Schedule A (Form 1040). The following IRS YouTube channels provide short, in-
Getting answers to your tax questions. On formative videos on various tax-related topics in English,
IRS.gov, you can get up-to-date information on Spanish, and ASL.
current events and changes in tax law. Youtube.com/irsvideos.
•
• IRS.gov/Help: A variety of tools to help you get an- Youtube.com/irsvideosmultilingua.
•
swers to some of the most common tax questions.
• Youtube.com/irsvideosASL.
• IRS.gov/ITA: The Interactive Tax Assistant, a tool that
will ask you questions and, based on your input, pro- Watching IRS videos. The IRS Video portal
vide answers on a number of tax law topics. (IRSVideos.gov) contains video and audio presentations
• IRS.gov/Forms: Find forms, instructions, and publica- for individuals, small businesses, and tax professionals.
tions. You will find details on the most recent tax
Online tax information in other languages. You can
changes and interactive links to help you find answers
find information on IRS.gov/MyLanguage if English isn’t
to your questions.
your native language.
• You may also be able to access tax law information in
your electronic filing software. Free Over-the-Phone Interpreter (OPI) Service. The
IRS is committed to serving our multilingual customers by
offering OPI services. The OPI Service is a federally fun-
Need someone to prepare your tax return? There are ded program and is available at Taxpayer Assistance
various types of tax return preparers, including tax prepar- Centers (TACs), other IRS offices, and every VITA/TCE
ers, enrolled agents, certified public accountants (CPAs), return site. The OPI Service is accessible in more than
attorneys, and many others who don’t have professional 350 languages.
credentials. If you choose to have someone prepare your
tax return, choose that preparer wisely. A paid tax pre- Accessibility Helpline available for taxpayers with
parer is: disabilities. Taxpayers who need information about ac-
• Primarily responsible for the overall substantive accu- cessibility services can call 833-690-0598. The Accessi-
racy of your return, bility Helpline can answer questions related to current and
future accessibility products and services available in al-
• Required to sign the return, and ternative media formats (for example, braille, large print,
• Required to include their preparer tax identification audio, etc.). The Accessibility Helpline does not have ac-
number (PTIN). cess to your IRS account. For help with tax law, refunds,
or account-related issues, go to IRS.gov/LetUsHelp.
Although the tax preparer always signs the return,
you're ultimately responsible for providing all the informa-
tion required for the preparer to accurately prepare your
return. Anyone paid to prepare tax returns for others
should have a thorough understanding of tax matters. For

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Note. Form 9000, Alternative Media Preference, or use direct deposit to receive their refunds. If you don’t
Form 9000(SP) allows you to elect to receive certain types have a bank account, go to IRS.gov/DirectDeposit for
of written correspondence in the following formats. more information on where to find a bank or credit union
• Standard Print. that can open an account online.

• Large Print. Getting a transcript of your return. The quickest way
• Braille. to get a copy of your tax transcript is to go to IRS.gov/
Transcripts. Click on either “Get Transcript Online” or “Get
• Audio (MP3). Transcript by Mail” to order a free copy of your transcript.
• Plain Text File (TXT). If you prefer, you can order your transcript by calling
800-908-9946.
• Braille Ready File (BRF).
Reporting and resolving your tax-related identity
Disasters. Go to Disaster Assistance and Emergency
theft issues.
Relief for Individuals and Businesses to review the availa-
ble disaster tax relief. • Tax-related identity theft happens when someone
steals your personal information to commit tax fraud.
Getting tax forms and publications. Go to IRS.gov/ Your taxes can be affected if your SSN is used to file a
Forms to view, download, or print all of the forms, instruc- fraudulent return or to claim a refund or credit.
tions, and publications you may need. Or, you can go to
IRS.gov/OrderForms to place an order. • The IRS doesn’t initiate contact with taxpayers by
email, text messages (including shortened links), tele-
Getting tax publications and instructions in eBook phone calls, or social media channels to request or
format. You can also download and view popular tax verify personal or financial information. This includes
publications and instructions (including the Instructions for requests for personal identification numbers (PINs),
Form 1040) on mobile devices as eBooks at IRS.gov/ passwords, or similar information for credit cards,
eBooks. banks, or other financial accounts.
• Go to IRS.gov/IdentityTheft, the IRS Identity Theft
Note. IRS eBooks have been tested using Apple's Central webpage, for information on identity theft and
iBooks for iPad. Our eBooks haven’t been tested on other data security protection for taxpayers, tax professio-
dedicated eBook readers, and eBook functionality may nals, and businesses. If your SSN has been lost or
not operate as intended. stolen or you suspect you’re a victim of tax-related
Access your online account (individual taxpayers identity theft, you can learn what steps you should
only). Go to IRS.gov/Account to securely access infor- take.
mation about your federal tax account. • Get an Identity Protection PIN (IP PIN). IP PINs are
• View the amount you owe and a breakdown by tax six-digit numbers assigned to taxpayers to help pre-
year. vent the misuse of their SSNs on fraudulent federal in-
come tax returns. When you have an IP PIN, it pre-
• See payment plan details or apply for a new payment vents someone else from filing a tax return with your
plan. SSN. To learn more, go to IRS.gov/IPPIN.
• Make a payment or view 5 years of payment history
and any pending or scheduled payments. Ways to check on the status of your refund.
• Access your tax records, including key data from your • Go to IRS.gov/Refunds.
most recent tax return, and transcripts. • Download the official IRS2Go app to your mobile de-
• View digital copies of select notices from the IRS. vice to check your refund status.
• Approve or reject authorization requests from tax pro- • Call the automated refund hotline at 800-829-1954.
fessionals.
Note. The IRS can’t issue refunds before mid-Febru-
• View your address on file or manage your communi- ary for returns that claimed the EIC or the additional child
cation preferences. tax credit (ACTC). This applies to the entire refund, not
just the portion associated with these credits.
Tax Pro Account. This tool lets your tax professional
submit an authorization request to access your individual Making a tax payment. Go to IRS.gov/Payments for in-
taxpayer IRS online account. For more information, go to formation on how to make a payment using any of the fol-
IRS.gov/TaxProAccount. lowing options.
Using direct deposit. The fastest way to receive a tax • IRS Direct Pay: Pay your individual tax bill or estima-
refund is to file electronically and choose direct deposit, ted tax payment directly from your checking or sav-
which securely and electronically transfers your refund di- ings account at no cost to you.
rectly into your financial account. Direct deposit also • Debit or Credit Card: Choose an approved payment
avoids the possibility that your check could be lost, stolen, processor to pay online or by phone.
or returned undeliverable to the IRS. Eight in 10 taxpayers

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• Electronic Funds Withdrawal: Schedule a payment Contacting your local IRS office. Keep in mind, many
when filing your federal taxes using tax return prepara- questions can be answered on IRS.gov without visiting an
tion software or through a tax professional. IRS TAC. Go to IRS.gov/LetUsHelp for the topics people
ask about most. If you still need help, IRS TACs provide
• Electronic Federal Tax Payment System: Best option
tax help when a tax issue can’t be handled online or by
for businesses. Enrollment is required.
phone. All TACs now provide service by appointment, so
• Check or Money Order: Mail your payment to the ad- you’ll know in advance that you can get the service you
dress listed on the notice or instructions. need without long wait times. Before you visit, go to
• Cash: You may be able to pay your taxes with cash at IRS.gov/TACLocator to find the nearest TAC and to check
a participating retail store. hours, available services, and appointment options. Or,
on the IRS2Go app, under the Stay Connected tab,
• Same-Day Wire: You may be able to do same-day choose the Contact Us option and click on “Local Offices.”
wire from your financial institution. Contact your finan-
cial institution for availability, cost, and time frames.
The Taxpayer Advocate Service (TAS)
Note. The IRS uses the latest encryption technology to Is Here To Help You
ensure that the electronic payments you make online, by
phone, or from a mobile device using the IRS2Go app are What Is TAS?
safe and secure. Paying electronically is quick, easy, and
TAS is an independent organization within the IRS that
faster than mailing in a check or money order.
helps taxpayers and protects taxpayer rights. Their job is
What if I can’t pay now? Go to IRS.gov/Payments for to ensure that every taxpayer is treated fairly and that you
more information about your options. know and understand your rights under the Taxpayer Bill
of Rights.
• Apply for an online payment agreement IRS.gov/ (
OPA) to meet your tax obligation in monthly install-
How Can You Learn About Your Taxpayer
ments if you can’t pay your taxes in full today. Once
you complete the online process, you will receive im- Rights?

mediate notification of whether your agreement has The Taxpayer Bill of Rights describes 10 basic rights that
been approved. all taxpayers have when dealing with the IRS. Go to
• Use the Offer in Compromise Pre-Qualifier to see if TaxpayerAdvocate.IRS.gov to help you understand what
you can settle your tax debt for less than the full these rights mean to you and how they apply. These are
amount you owe. For more information on the Offer in your rights. Know them. Use them.
Compromise program, go to IRS.gov/OIC.
What Can TAS Do for You?
Filing an amended return. Go to IRS.gov/Form1040X
for information and updates. TAS can help you resolve problems that you can’t resolve
with the IRS. And their service is free. If you qualify for
Checking the status of your amended return. Go to their assistance, you will be assigned to one advocate
IRS.gov/WMAR to track the status of Form 1040-X amen- who will work with you throughout the process and will do
ded returns. everything possible to resolve your issue. TAS can help
you if:
Note. It can take up to 3 weeks from the date you filed
your amended return for it to show up in our system, and • Your problem is causing financial difficulty for you,
processing it can take up to 16 weeks. your family, or your business;
Understanding an IRS notice or letter you’ve re- • You face (or your business is facing) an immediate
ceived. Go to IRS.gov/Notices to find additional informa- threat of adverse action; or
tion about responding to an IRS notice or letter. • You’ve tried repeatedly to contact the IRS but no one
has responded, or the IRS hasn’t responded by the
Note. You can use Schedule LEP (Form 1040), Re- date promised.
quest for Change in Language Preference, to state a pref-
erence to receive notices, letters, or other written commu-
How Can You Reach TAS?
nications from the IRS in an alternative language. You
may not immediately receive written communications in TAS has offices in every state, the District of Columbia,
the requested language. The IRS’s commitment to LEP and Puerto Rico. Your local advocate’s number is in your
taxpayers is part of a multi-year timeline that is scheduled local directory and at TaxpayerAdvocate.IRS.gov/
to begin providing translations in 2023. You will continue Contact-Us. You can also call them at 877-777-4778.
to receive communications, including notices and letters
in English until they are translated to your preferred lan-
guage.

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How Else Does TAS Help Taxpayers? to resolve tax problems with the IRS, such as audits, ap-
peals, and tax collection disputes. In addition, LITCs can
TAS works to resolve large-scale problems that affect provide information about taxpayer rights and responsibili-
many taxpayers. If you know of one of these broad issues, ties in different languages for individuals who speak Eng-
report it to them at IRS.gov/SAMS. lish as a second language. Services are offered for free or
a small fee for eligible taxpayers. To find an LITC near
TAS for Tax Professionals you, go to TaxpayerAdvocate.IRS.gov/about-us/Low-
Income-Taxpayer-Clinics-LITC or see IRS Pub. 4134, Low
TAS can provide a variety of information for tax professio- Income Taxpayer Clinic List.
nals, including tax law updates and guidance, TAS pro-
grams, and ways to let TAS know about systemic prob-
lems you’ve seen in your practice.

Low Income Taxpayer Clinics (LITCs)

LITCs are independent from the IRS. LITCs represent in-
dividuals whose income is below a certain level and need

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                    To help us develop a more useful index, please let us know if you have ideas for index entries.
Index               See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.
 
                                     Determining   17
403(b) account    3                  Excess amounts   18                  Q
403(b) plans:                        Excess deferrals 18                  qualified birth or adoption                    18
  Basics   3                         Excess elective deferral  18         qualified birth or adoption 
  Benefits  3                        Excise tax 18                         distribution  1 20, 
  Participation 4                  Excise tax:                            Qualified domestic relations 
  Self-employed ministers   4        Excess contributions 18               order  22
  What is a 403(b) plan?  3          Reporting requirement  18
  Who can set up a 403(b)                                                 R
  account?     4                   F                                      Reporting contributions:
A                                  Full-time or part-time 11               Chaplains  5
                                                                          Reporting Contributions:
After-tax contributions   5        G                                       Self-employed ministers       5
Assistance (See Tax help)                                                 Required distributions       2 19, 
                                   Gift tax 22
                                                                          retirement income accounts                     1 3 5,  , 
B                                                                         Retirement savings contributions 
                                   I
Basics 3                                                                   credit  1 26, 
                                   Incidental life insurance   7
Benefits 3                                                                Rollovers 18 20, 
                                   Includible compensation     7
                                                                          Roth contribution program                      11
C                                    403(b) plan  16
                                     Figuring 9
Catch-up contributions    17                                              S
                                     Foreign missionaries 16
Chaplain   4                                                              Salary reduction agreement                     11
                                     Incidental life insurance 7
Church employees     16                                                   Self-employed ministers        4 5 12 16,  ,     , 
                                     Self-employed ministers   16
  Years of service  16
                                   Includible compensation for your 
Contributions   4                    most recent year of service:         T
  After-tax 4                        Definition 6                         Tax help 27
  Catch-up   17                                                           Transfers 19
  Elective deferrals 4 5,          L                                       90-24 transfer 19
  Nonelective  4                   Limit on annual additions    6          Conservatorship 19
  Reporting  5                     Limit on elective deferrals  11         Direct-trustee-to-trustee     20
Correcting excess contributions 17   15-year rule 11                       Insolvency 19
Credit, for retirement savings       Figuring 14                           Permissive service credit     20
  contributions   26
                                     General limit 11
                                                                          V
D
                                   M                                      Voluntary deductible 
Distributions 18                                                           contributions   22
                                   MAC (See Maximum amount 
  10-year tax option 19              contributable)
  90-24 transfer  19               Maximum amount contributable        5  W
  Deceased employees      22         Components    5                      What is a 403(b) plan?       3
  Direct rollover 22                 How to figure MAC 5
  Eligible retirement plans 21       When to figure MAC   6               Y
  Frozen deposit  22               Minimum required distributions      2, Years of service 11
  Gift tax 22                        19                                    Church employees     12 16, 
  Minimum required   2 19,         Ministers 4 16,                         Definition 12
  Qualified domestic relations     Missing children  2                     Employer's annual work period                   12
  order    22                      Most recent year of service    6        Full year of service 13
  Rollovers  20                    Most recent year of service,            Full-time employee for the full 
  Second rollover  22                figuring 7                            year    12
  Transfers  19                                                            Full-time for part of the year                13
                                   N                                       Other than full-time for the full 
E                                                                          year    13
                                   Nonelective contributions    4 6, 
Elective deferrals  4 5,                                                   Part-time for the full year   13
Eligible employees   4 12,         P                                       Part-time for the part of the year              13
Employer's annual work period  12  Pre-tax contributions  7 10 20 24, , ,  Self-employed minister      16
Excess contributions     17        Publications (See Tax help)             Total years of service      12
  Correcting  17

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