Tax-Sheltered  Annuity Plans  (403(b) Plans)

For Employees of Public Schools and Certain 
Tax-Exempt Organizations

taxmap/pubs/p571-000.htm#TXMP323127ee What's New for 2007(p1)

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Rollovers by nonspouse beneficiaries.(p1)

For distributions after December 31, 2006, a nonspouse beneficiary may make a direct rollover of a distribution from an eligible retirement plan of a deceased participant if the rollover is a direct transfer to an inherited IRA established to receive the distribution. The transfer will be treated as an eligible rollover distribution and the receiving individual retirement plan will be treated as an inherited retirement account or annuity.

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Rollover of after-tax contributions.(p1)

For tax years beginning after December 31, 2006, participants in a 403(b) plan can roll over after-tax contributions to an eligible retirement plan, and receive rollover after-tax contributions from an eligible retirement plan, if the rollover is made through a direct trustee-to-trustee transfer.

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Retired public safety officers.(p1)

For tax years beginning after December 31, 2006, if you are an eligible retired public safety officer, distributions of up to $3,000, made directly from your 403(b) plan to pay accident, health, or long-term care insurance are not included in your taxable income. The premiums can be for you, your spouse, or your dependents.

A public safety officer is a law enforcement officer, fire fighter, chaplain, or member of a rescue squad or ambulance crew.

For additional information, see Publication 575, Pension and Annuity Income.

taxmap/pubs/p571-000.htm#TXMP35f7e4cc (p1)

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Limit on elective deferrals.(p2)

For 2007, the limit on elective deferrals has been increased from $15,000 to $15,500.

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Limit on annual additions.(p2)

For 2007, the limit on annual additions has been increased from $44,000 to $45,000.

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90-24 Transfer.(p2)

After September 24, 2007, you may no longer make a 90-24 transfer without your employer's involvement.

taxmap/pubs/p571-000.htm#TXMP5d71c581 What's New for 2008(p2)

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Rollovers to Roth IRA.(p2)

Beginning January 1, 2008, distributions from tax-qualified retirement plans and tax-sheltered annuities can be converted by making a direct rollover into a Roth IRA subject to the restrictions that currently apply to rollovers from a traditional IRA into a Roth IRA.

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Limit on elective deferrals.(p2)

For 2008, the limit on elective deferrals remains unchanged at $15,500.

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Limit on annual additions.(p2)

For 2008, the limit on annual additions has been increased from $45,000 to $46,000.

taxmap/pubs/p571-000.htm#TXMP59d7c915 Finalized Regulations(p2)

Final income tax regulations pertaining to tax-sheltered annuities within the meaning of section 403(b) of the Internal Revenue Code were published on July 26, 2007. Generally, these regulations will be effective for taxable years beginning after December 31, 2008.

taxmap/pubs/p571-000.htm#TXMP18e74088 Reminder(p2)

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Photographs of missing children.(p2)

The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

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Introduction

This publication can help you better understand the tax rules that apply to your 403(b) (tax-sheltered annuity) plan.

In this publication, you will find information to help you:

• Determine the maximum amount that can be contributed to your 403(b) account in 2008.
• Determine the maximum amount that could have been contributed to your 403(b) account in 2007.
• Identify excess contributions.
• Understand the basic rules for claiming the retirement savings contributions credit.
• Understand the basic rules for distributions and rollovers from 403(b) accounts.

This publication does not provide specific information on the following topics.

• Distributions from 403(b) accounts. This is covered in Publication 575.
• Rollovers. This is covered in Publication 590, Individual Retirement Arrangements (IRAs).
• Withdrawals, repayments, and loans from 403(b) annuity contracts for taxpayers who suffered economic losses as a result of Hurricane Katrina, Rita, or Wilma. This is covered in Publication 4492, Information for Taxpayers Affected by Hurricanes Katrina, Rita, and Wilma.

taxmap/pubs/p571-000.htm#TXMP52f5d1bf How to use this publication.(p2)

This publication is organized into chapters to help you find information easily.

Chapter 1 answers questions frequently asked by 403(b) plan participants.

Chapters 2 through 6 explain the rules and terms you need to know to figure the maximum amount that could have been contributed to your 403(b) account for 2007 and the maximum amount that can be contributed to your 403(b) account in 2008.

Chapter 7 provides general information on the prevention and correction of excess contributions to your 403(b) account.

Chapter 8 provides general information on distributions, and transfers and rollovers.

Chapter 9 provides blank worksheets that you will need to accurately and actively participate in your 403(b) plan. Filled-in samples of most of these worksheets can be found throughout this publication.

Chapter 10 explains the rules for claiming the retirement savings contributions credit.

taxmap/pubs/p571-000.htm#TXMP51236875 Comments and suggestions.(p2)

We welcome your comments about this publication and your suggestions for future editions.

You can write to us at the following address:

Internal Revenue Service 
TE/GE and Specialty Forms and 
Publications Branch 
SE:W:CAR:MP:T:T:SP 
1111 Constitution Ave. NW, IR-6526 
Washington, DC 20224

We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.

You can email us at *taxforms@irs.gov. (The asterisk must be included in the address.) Please put "Publications Comment" on the subject line. Although we cannot respond individually to each email, we do appreciate your feedback and will consider your comments as we revise our tax products.

taxmap/pubs/p571-000.htm#TXMP0c15e625 Ordering forms and publications.(p2)

Visit www.irs.gov/formspubs to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 business days after your request is received.

 
National Distribution Center 
P.O. Box 8903 
Bloomington, IL 61702-8903

taxmap/pubs/p571-000.htm#TXMP75ba833d Tax questions.(p2)

If you have a tax question, visit www.irs.gov or call 1-800-829-1040. We cannot answer tax questions sent to either of the addresses shown earlier.

Useful items

You may want to see:

Previous Page:  Publication 570 - Tax Guide for Individuals With Income from U.S. Possessions - How To Get Tax Help Next Page:  Publication 571 - Tax-Sheltered Annuity Programs for Employees of Public Schools and Certain Tax-Exempt Organizations - 403(b) Plan Basics Use   to find additional occurrences of topic items.