Code section 402(g)(8) permits a participant to exceed the General Limit on salary reduction contributions provided that the participant has completed 15 or more full-time years of paid church-related service (or its equivalent). Under this "years of service catch-up," the General Limit on salary reduction contributions may be increased by the lesser of:
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$3,000; or,
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$15,000 minus amounts contributed above the General Limit on salary reduction contributions in years since Jan. 1, 1987; or
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$5,000 multiplied by the participant’s total years of paid church-related service, minus all prior salary reduction contributions made to plans of church-related employers.
Effective Jan. 1, 2009, $19,500 is the maximum permissible amount of salary reduction contributions for a taxable year under this years of service catch-up. The aggregate amounts contributed above the General Limit on salary reduction contributions may not exceed a lifetime cap of $15,000. The participant must maintain his or her own records for amounts applied to the $15,000 cap. Once the $15,000 lifetime cap is reached, salary reduction contributions for future years cannot exceed the General Limit on salary reduction contributions ($16,500 for 2009). The amount applied to the $15,000 cap indicated on the Maximum Contribution Results letter assumes the maximum permissible salary reduction amounts will be contributed. It is important to remember that the limit on salary reduction contributions is subject to the Basic Limit or the $10,000 Limit.