As a participant in the Northern Illinois University Supplemental Retirement Plan – Internal Revenue Code 403(b) (“Plan”), the University wanted to make you aware of an important rule under the Internal Revenue Code (“Code”) that may impact your retirement planning.
Code Section 415(c) imposes annual limits on the total amount (employer and employee) of contributions that can be made to a defined contribution retirement plan, such as a 403(b) or 401(k) plan. The 415(c) limit for 2025 is the lesser of $70,000 or 100% of compensation. In determining whether these contribution limits have been satisfied for the Plan, contributions made on your behalf to a retirement plan sponsored by an employer other than the University may need to be taken into account. For example, if you owned or controlled more than 50% of another employer, and that employer sponsored a retirement plan, then contributions on your behalf to both that plan, and the Plan together could not exceed the 415(c) limit. If the contribution limits are exceeded and not timely corrected, the tax advantaged status of your retirement benefits could be at risk.
In order to determine whether these rules affect you, please answer the following three questions:
- Do you perform services for an employer in addition to Northern Illinois University?
- Do you own or control more than 50% of that employer?
- Do you make contributions or are contributions made on your behalf to a retirement plan sponsored by that employer?
If you answered “yes” to all three of these questions, please contact your financial planner or tax consultant to determine if contributions to the retirement plans are required to be aggregated. If so, and it is determined that excess contributions were made as a result of this aggregation, please notify Human Resource Services by emailing HumanResources@niu.edu as soon as possible.
Note that this is an extremely abbreviated overview of complex rules. The University cannot serve as a tax or financial advisor for participants, and application of the rules will need to be made by each participant and their advisor. However, the University wanted to communicate the key issues so that you can identify whether these rules may affect you and are aware of the potential ramifications of these rules.
