Most Recent Year of Service

Your most recent year of service is your last full year of service, ending on the last day of your tax year that you worked for the employer that maintained a 403(b) account on your behalf.

Tax year different from employer's annual work pe- riod. If your tax year isn’t the same as your employer's annual work period, your most recent year of service is made up of parts of at least two of your employer's annual work periods.

Example. A professor who reports income on a calendar-year basis is employed on a full-time basis by a university that operates on an academic year (October through May). To figure the includible compensation for 2025, the professor's most recent year of service is from January through May 2025 and from October through December 2025.

Figuring Your Most Recent Year of Service

To figure your most recent year of service, begin by determining what is a full year of service for your position. A full

6 Chapter 3 Limit on Annual Additions Publication 571 (1-2026)

year of service is equal to full-time employment for your employer's annual work period.

After identifying a full year of service, begin counting the service you have provided for your employer starting with the service provided in the current year.

Part-time or employed only part of the year. If you are a part-time or a full-time employee who is employed for only part of the year, your most recent year of service is your service this year and your service for as many previous years as is necessary to total 1 full year of service. To determine your most recent year of service, add the following periods of service.

• Your service during the year for which you are figuring the limit on annual additions.

• Your service during your preceding tax years until the total service equals 1 year of service or you have figured all of your service with the employer.

Example. You were employed on a full-time basis from July through December 2023 ( ¹ /2 year of service), July through December 2024 ( ¹ /2 year of service), and October through December 2025 ( ¹ /4 year of service). Your most recent year of service for figuring your limit on annual additions for 2025 is the total of your service during 2025 ( ¹ /4 year of service), your service during 2024 ( ¹ /2 year of service), and your service during the months of October through December 2023 ( ¹ /4 year of service).

Not yet employed for 1 year. If, at the close of the year, you haven’t yet worked for your employer for 1 year (including time you worked for the same employer in all earlier years), use the period of time you have worked for the employer as your most recent year of service.