Understanding Your Retirement Contribution Limits (and How to Maximize Your Savings)

“How do I max out my retirement savings for the year?” This is a common benefits question towards the end of the year. The IRS limits how much you can put into your U-M retirement accounts, but the rules aren’t always easy to understand.

How to Max Out Your Contributions

You can look up your individual contribution limits in Wolverine Access under Employee Self-Service > Benefits > Retirement Self-Service > Calculate Ret.Contribution. Wolverine Access shows a “per pay amount” that indicates how much you can save per paycheck for the rest of the year.

To max out your savings in the 403(b) SRA or 457(b) Deferred Compensation Plan for the year, adjust your contributions to this amount under Initiate Ret. Savings Elections in Retirement Self-Service.

When making changes, timing matters! Be sure to refer to these deadlines if you want to make changes that will take effect yet in 2017. Remember, the 403(b) SRA and 457(b) have different deadlines to change the amount you contribute. Deadlines for making changes for 2018 will be posted online later this fall.

Understanding the Math Behind Your Contribution Limit

One Limit for the Basic Retirement Plan and SRA Together

Generally speaking, there’s one limit that applies to contributions to 403(b) plans. The limit goes up by $6,000 once you reach age 50. It’s also indexed periodically by the IRS.

403(b) Contribution Limits for 2017 and 2018
Plan Type 2017 Limit 2018 Limit
All 403(b) accounts (under age 50) $18,000 $18,500
All 403(b) accounts (age 50+) $24,000 $24,500

The tricky part is that you may have more than one 403(b) plan. Your annual limit looks at all of your 403(b) contributions combined. This includes:

  • Your 5% or 4.5% contributions to the U-M Basic Retirement Plan
  • Any contributions you make to a U-M 403(b) Supplemental Retirement Account, whether pre-tax or after-tax Roth
  • Any contributions you make to another employer’s 403(b) plan

The 403(b) limit does not apply to the 10% or 9% matching contributions the university makes to the Basic Retirement Plan on your behalf. These contributions go into a different type of account, called a 401(a).

One Limit for the 457(b) Deferred Compensation Plan

Similar limits generally apply to the 457(b) Deferred Compensation Plan.

457(b) Contribution Limits for 2017 and 2018
Plan Type 2017 Limit 2018 Limit
All 457(b) accounts (under age 50) $18,000 $18,500
All 457(b) accounts (age 50+) $24,000 $24,500

Limits for Compulsory Participants

If you’re a compulsory participant in the Basic Retirement Plan and you earn more than the FICA taxable wage base ($127,200 for 2017), the limits outlined here apply a little differently to you. Check out “Compulsory Participation” on the Basic Retirement Plan page to learn more.

What Happens When You Reach the Max?

If you reach your contribution max, the payroll system will automatically stop any 403(b) and 457(b) contributions for the rest of the calendar year so that you don’t go over the limit. This may include your SRA contributions as well as your 5% or 4.5% contribution for the year to the Basic Retirement Plan.

But please note that it only takes U-M contributions into account. You’ll need to keep track of any additional contributions to retirement plans outside the university, which count toward the same limit. This includes contributions to a 401(k) and the Federal Thrift Savings Plan.

Learn More

Visit Contribution Limits for complete information.

Note: The university does not provide tax or investment advice. This information is provided for educational purposes only. Please consult with a qualified tax advisor to ensure that you do not exceed IRS contribution limits.