I would like to contribute as much money to my 403(b) as possible this year, and I certainly want to take advantage of any employer matching. It is my understanding that employer contributions do not count toward the IRS's individual contribution limit for retirement accounts. I know that this is the case with the TSP as well as 401(k) accounts as described here, here, and in many other places besides.

In my current position, however, I have a 403(b), and my employer is telling me that I should not contribute the full $19,500 for 2020 because I would then not be able to receive the full matching amount. They are referring specifically to the individual IRS contribution limit, not the combined employer/employee limit. I have not been able to find any evidence that 403(b) plans are different from 401(k) plans in this respect; on the contrary, both the IRS website and this article seem to agree with me. Is there something I am missing? If I am correct, how should I handle the conversation with my employer politely? It seems impertinent to correct someone in their official capacity.

  • I believe you are right. Perhaps your employer is telling you that you shouldn't contribute the full amount, but I suppose you could do so anyway despite their recommendation.
    – Daniel
    Feb 7, 2020 at 13:39
  • What is your employer's matching policy? Is there a limit on what they will match? Your understanding of the individual and combined limits is correct.
    – D Stanley
    Feb 7, 2020 at 13:48
  • 1
    I would phrase the request along the lines of "I am very surprised to learn that the match could cause me to hit the employee+employer combined limit for our plan because it increased for 2020 to $57,000. Exactly how much can I contribute through paycheck deferral to reach but not exceed the $57,000 combined limit?" If you're polite, ask for their help doing the calculation, and slip in what they've overlooked without a hint that they didn't know about it, I expect they'll be helpful. Maybe you're lucky enough to actually be eligible for profit sharing in the neighborhood of $40k.
    – Ben Voigt
    Feb 7, 2020 at 15:24

2 Answers 2


There is no difference in limits between 401(k) and 403(b) plans. The annual limit for employee contributions match, as do the limits for combined employee/employer limits.

According to the IRS

Highlights of changes for 2020

The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan is increased from $19,000 to $19,500.

Sometimes employees want to try and contribute at a high rate in the early part of the year, which can mean they reach their pre-tax limit before the end of the year. In some cases that can mean that they can miss out on some of the match. Some companies warn employees about this.

For example:

  • $19,500 limit; 26 paychecks, so $750 per check to reach the max; If you contribute 6% they will contribute 3%; but never more than 3%.
  • Salary $100,000
  • If you contribute 19.5% you reach the limit on the last paycheck; They match 3% or $115.38 per check for $3,000 in the year.
  • If you decide to contribute 39% (double) you hit the max on the 13th check; but the company is still matching $115.38 per check; and they stop after the 13th check.

Now some companies at the end of the year will "true up" they contribution, but they might not. Thus the warning.


mhoran_psprep is correct: employer matching does not count toward the IRS individual contribution limit. Thank you. I am adding my own answer to share the details in case someone else should encounter a similar problem. In short, I was correct about how the IRS worked, but I misunderstood my employer's plan.

In my retirement plan, contributions that I make can be classified as one of two kinds: "supplemental" or "matching." Sensibly enough, only "matching" contributions will be matched by funds from my employer, and my maximum "matching" contributions are set at a fixed percentage of my salary.

When I was told that I needed to contribute less money so that I could, "Leave room for matching contributions," I understood them to mean that the matching funds provided by my employer would count toward my individual limit. They actually meant that if I contributed too much money via "supplemental" contributions I would reach the IRS limit prematurely and not be able to make enough "matching" contributions.

At the risk of belaboring the point: if the IRS gives me $19,500, then my employer gives me two buckets in which to transfer that money into my 403(b). One bucket is little but gets a matched contribution from them. The other bucket is large enough to accommodate the entire $19,500. I need to fill the little bucket first. My problem was that I did not know that I had more than one bucket.

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