Question

Myra, age 52, has worked for XYZ Educational Opportunities for the past 18 years. XYZ sponsors a Section 403(b) or tax-sheltered annuity (TSA) plan. Myra wants to contribute the maximum amount possible to her TSA. Assuming Myra has never used her available catch-up allowance, what is the total maximum amount she can contribute to her TSA plan for 2021?

Answer 1

Myra can contribute up to $26,000 to her TSA plan in 2021, which includes the standard contribution limit plus the additional catch-up contribution for participants over the age of 50.

Step-by-step explanation:

The subject matter revolves around Myra, age 52, who wishes to contribute the maximum amount possible to her Section 403(b) plan for the year 2021. For individuals over 50, there is a catch-up provision that allows them to contribute additional funds to their retirement plans. In 2021, the base limit for contributions to 403(b) plans was $19,500. However, for those aged 50 and over, there's an additional catch-up contribution limit of $6,500. Consequently, Myra, having never used her catch-up allowance, can contribute a total maximum amount of $26,000 to her TSA plan in 2021 -- combining the base limit and the catch-up contribution.