Author Topic: Multiple 4xx(x) type retirement plans with the same employer at the same time?  (Read 5341 times)

Gone Fishing

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Seems like I have come across a few posts where people seem to be able to contribute to a combination of 401(k), 403(b), 457(b), and other plans all at the same time.  Is this accurate?  Does that mean some folks get to put $17,500 in each? 

And while we are at it, why are limits for various plans (especially when you get into the self employed world) different in the first place?  This hardly seems fair (although, not much is). 

FrugalSpendthrift

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And while we are at it, why are limits for various plans (especially when you get into the self employed world) different in the first place?  This hardly seems fair (although, not much is).
I can't answer your first question, but the limits are the same for a regular 401k and a self employed 401k, it's just that when you are in charge of the self employed 401k, you have more control over the employer contribution.  The limits for 2014 are $17,500 salary deferral and a total of $52,000 when you include the employer match/profit sharing. 

fallstoclimb

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I have access to all three:  I have a 401(k) equivalent through my work, and my husband has access to both a 403(b) and a 457(b).  I'm not actually positive if he is allowed to put $17,500 into each or if that is a combined total limit.  I know there are others on the board who are able to max out both though.

People who have access to 457s tend to be public employees with lower salaries, so its probably extremely rare for people to max out both a 457 and 403(b), but this is MMM so...

briandougherty

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You can contribute to them all but 403(b) and 401(k) have a combined limit of $17,500.  457s have a separate contribution limit so you can contribute $35,000 overall if you have access to both.

SO will be maxing out both next year, I think.

NinetyFour

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I have access to a 401K equivalent (at TIAA) and a 403b.  My HR department assures me that I can contribute $23,000 to EACH one.  (Since I am old, the limits are higher than the $17,500 for you youngsters.)

I had been under the impression that my TOTAL contribution was capped at $23,000, but someone here at the forum encouraged me to ask my HR folks.  Thanks to whoever that forum member was!

GGNoob

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I have a 401k and 457 Plan. I can contribution $17,500 to BOTH for a total of $35,000.

briandougherty

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I have access to a 401K equivalent (at TIAA) and a 403b.  My HR department assures me that I can contribute $23,000 to EACH one.  (Since I am old, the limits are higher than the $17,500 for you youngsters.)

I had been under the impression that my TOTAL contribution was capped at $23,000, but someone here at the forum encouraged me to ask my HR folks.  Thanks to whoever that forum member was!


Quote
The amount you can defer as pre-tax or designated Roth contributions to all your plans (not including 457(b) plans) is $17,500 in 2013 and 2014.

Quote
You’re 50 years old and participate in both a 401(k) and a 403(b) plan. Both plans permit the maximum contributions for 2013, $17,500; but the 403(b) doesn’t allow age-50 catch-ups. You can still contribute a total of $23,000 in pre-tax and designated Roth contributions to both plans. Your contributions can’t exceed either:

  • your individual limit plus the amount of age-50 catch-up contributions, or
  • the maximum contribution in 2013 for that plan type (for example, you couldn’t contribute the entire $23,000 to the 403(b) plan because that 403(b) plan only allows a maximum contribution of $17,500 in 2013).

How Much Salary Can You Defer if You’re Eligible for More than One Retirement Plan?

Could your HR be wrong? The IRS wording isn't great either but bullet point two makes it clear that they mean $23,000 combined to both. This is also their help page and not the Federal Register.
« Last Edit: September 04, 2014, 03:21:15 PM by briandougherty »

johnny847

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I have access to a 401K equivalent (at TIAA) and a 403b.  My HR department assures me that I can contribute $23,000 to EACH one.  (Since I am old, the limits are higher than the $17,500 for you youngsters.)

I had been under the impression that my TOTAL contribution was capped at $23,000, but someone here at the forum encouraged me to ask my HR folks.  Thanks to whoever that forum member was!


Quote
The amount you can defer as pre-tax or designated Roth contributions to all your plans (not including 457(b) plans) is $17,500 in 2013 and 2014.

Quote
Youíre 50 years old and participate in both a 401(k) and a 403(b) plan. Both plans permit the maximum contributions for 2013, $17,500; but the 403(b) doesnít allow age-50 catch-ups. You can still contribute a total of $23,000 in pre-tax and designated Roth contributions to both plans. Your contributions canít exceed either:

  • your individual limit plus the amount of age-50 catch-up contributions, or
  • the maximum contribution in 2013 for that plan type (for example, you couldnít contribute the entire $23,000 to the 403(b) plan because that 403(b) plan only allows a maximum contribution of $17,500 in 2013).

How Much Salary Can You Defer if Youíre Eligible for More than One Retirement Plan?

Could your HR be wrong?
Yea I'm pretty sure your HR is wrong....

As for why some people are allowed to contribute more money to tax advantaged accounts than others...the only answer I've got for you is it's just not fair.
But hey, I'm getting an even shorter end of the stick - I can max out my Roth and invest the rest into a taxable. My university offers 403's and 457's to their faculty and even temporary staff, but apparently graduate students aren't allowed to contribute to them.

zataks

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That "not including 457(b) plans)" is what gets me.  I have heard that you can do a total of 17,500 and I have heard you can do 17,500 each (457&401/403) but have not been fully persuaded either way.  Surely there is a tax expert on this board?!

zataks

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So the IRS page linked is not necessarily 100% clear. 

The link below from CNN Money is a bit clearer:

http://money.cnn.com/retirement/guide/401k_457plans.moneymag/index2.htm

And while it's old (2006) this bit from About Money echoes CNN Money:

http://taxes.about.com/b/2006/04/12/can-i-contribute-to-both-a-401k-and-a-457-plan.htm

EDIT:  And this one from the MintLife Blog (2012)
https://www.mint.com/blog/investing/mintlife-reader-qa-401ks-457bs-and-iras-oh-my-072012/

TL;DR: if you have access to a 401(k) and a 457(b) you can invest and defer taxes on $35,000 annually.

EDIT2: If you're making enough to defer $35k you probably are (forgot this is MMM) may be phased out of IRA options, but deferring 35k instead of 17k might bring you to an AGI that would allow for IRA tax benefits?  Thoughts?
« Last Edit: September 04, 2014, 04:30:11 PM by zataks »

johnny847

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So the IRS page linked is not necessarily 100% clear. 

The link below from CNN Money is a bit clearer:

http://money.cnn.com/retirement/guide/401k_457plans.moneymag/index2.htm

And while it's old (2006) this bit from About Money echoes CNN Money:

http://taxes.about.com/b/2006/04/12/can-i-contribute-to-both-a-401k-and-a-457-plan.htm

EDIT:  And this one from the MintLife Blog (2012)
https://www.mint.com/blog/investing/mintlife-reader-qa-401ks-457bs-and-iras-oh-my-072012/

TL;DR: if you have access to a 401(k) and a 457(b) you can invest and defer taxes on $35,000 annually.

EDIT2: If you're making enough to defer $35k you probably are (forgot this is MMM) may be phased out of IRA options, but deferring 35k instead of 17k might bring you to an AGI that would allow for IRA tax benefits?  Thoughts?

Yup, it could allow you to drop below the AGI requirement for deductible traditional IRA contributions. Also, if you make a lot of money, it could drop you down into the region that qualifies you for direct contributions to a Roth IRA.

ender

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Best part would be if you got the full savers credit on the $2000 you contribute to your IRA because your $35k in contributions pushed your AGI low enough to max out the credit.

Maybe get a ridiculous EITC refund too?

Work it!
« Last Edit: September 04, 2014, 05:55:31 PM by enderland »

johnny847

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Best part would be if you got the full savers credit on the $2000 you contribute to your IRA because your $35k in withdrawals [typo, he meant contributions] pushed your AGI low enough to max out the credit.

Maybe get a ridiculous EITC refund too?

Work it!

But yea, it can qualify you for the EITC also. Which is kinda ironic because if you can afford to contribute $35k you're not poor. I guess you're living like a "poor person" because you won't have all that much disposable income...but I suspect for Mustachians it will be enough (I haven't actually done this calculation).

Elle 8

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That "not including 457(b) plans)" is what gets me.  I have heard that you can do a total of 17,500 and I have heard you can do 17,500 each (457&401/403) but have not been fully persuaded either way.  Surely there is a tax expert on this board?!

I'm not a tax expert but I work in the benefits department of a large company.  Eligible employees are able to contribute the max to both the 403(b) and the 457(b).  Meaning a total of 35K for those under 50 years old.  I say 'eligible employees' because only the top 5% highest paid in the company are eligible to contribute to the 457(b). 
« Last Edit: September 04, 2014, 06:03:41 PM by Elle 8 »

zataks

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I'm not a tax expert but I work in the benefits department of a large company.  Eligible employees are able to contribute the max to both the 403(b) and the 457(b).  Meaning a total of 35K for those under 50 years old. I say 'eligible employees' because only the top 5% highest paid in the company are eligible to contribute to the 457(b).

I'm guessing you are not in a government agency?  All employees in my government agency are eligible for the 457(b).  However, upper management has the 401(k) option I was told because their employer match is so great, they needed somewhere else to put it.  =p

Another Reader

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A 457 plan is deferred compensation, not a qualified retirement plan.  The 401k and 403b plans are qualified plans, hence the maximum of $17,500 or $23,000 applies to the combination of both qualified plans.  You can contribute the maximum to a 457 plan and the maximum to any combination of qualified plans.

NinetyFour

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Hmm.  I think my TIAA plan is not truly a 401K plan, though I am not sure what the distinction is.  Perhaps that is why I am (apparently) allowed to contribute a full $23,000 to that plan as well as $23,000 to the 403b plan.  In any case, I will double check with HR, TIAA, and my tax guy.

I am not even close to contributing $46,000--in fact, just putting aside $23,000 will be a stretch, so I am not very worried about it.  But it would be nice to know.