Author Topic: Road block adding 403b to my 457  (Read 1505 times)

Recliner

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Road block adding 403b to my 457
« on: February 28, 2018, 06:12:39 PM »
I'm a firefighter and have a 457 through my employer. Unfortunately my employer doesn't offer a 403b in addition to my 457. I've been trying to gather information so that I can present a case to my union or HR so that a 403b option can be added.

I reached out to my point of contact with the third party administrator for our 457 and he had never heard of a 403b! This is the guy that assists every single one of the 500+ city employees on there 457 portfolio. I explained what a 403b was and he said he'd pass my info on to the guy I recognized as the VP for the TPA for our 457. That guy called me back within 10 minutes and I explained I was trying to gather info on the costs my employer would have to add a 403b option to our 457 program.

He asked why I was interested in a 403b since we already have a 457 with a match. I explained I max the 457 and would like to have additional tax deferred investments. He said that there is a $18,500 limit and I already hit that with the 457 so I couldn't contribute anything to a 403b! I explained that I've read about being able to contribute $18,500 to both the 457 & the 403b. He said I was wrong and asked where I read that and I told him on www.irs.gov

He got a little condescending and said he'd like to see that because it would be the best thing he's heard of in his 30 year career. I let him know I'd email him the links by the end of the day.

I emailed him 2 links from irs.gov that outline how it's allowed along with giving the quotes that specifically talk about both being allowed. I also provided 2 other links that clearly spelled it out too.

Now I'm thinking if the administrator is this difficult to win over I'll have even more trouble with HR. Does anyone have advice on how to win this battle and the possible reasons why my employer would resist adding the 403b option to our 457 plan? Is there a cost to my employer?

fixie

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Re: Road block adding 403b to my 457
« Reply #1 on: February 28, 2018, 08:29:41 PM »
You are correct.  They are entirely different tax advantaged accounts.  I am a state worker and contribute to and max out both.  It's really too bad you know more than your advisor and that he might be a jerk.  Sounds like this is pretty common.  Keep pushing...it sounds like you are a city worker so maybe check into your state as well.  Get your co-workers and colleague's in on it too!  Good luck friend.
Fixie

DreamFIRE

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Re: Road block adding 403b to my 457
« Reply #2 on: February 28, 2018, 09:06:45 PM »

I just maxed out my 457 to $24,500 this year.   I think the 403b option is available where I work, although I never hear it mentioned.  If so, I'm going to sink another $15,000 into that this year to significantly reduce my income within the 22% tax bracket.  I also have a Roth and post-tax investments.  My remaining pay left on the paycheck will be around half what it was, but it's enough, plus I'm cash heavy right now, so it's all good.

hadabeardonce

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Re: Road block adding 403b to my 457
« Reply #3 on: March 01, 2018, 12:17:46 AM »
If you have a union get them involved as an advocate. They can bargain for benefits like the 403b, specific vendors, after-tax non-Roth contributions, etc.

I max both and fall under the limit for contributing $5500 to a Roth IRA.

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Recliner

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Re: Road block adding 403b to my 457
« Reply #4 on: March 01, 2018, 06:50:05 AM »
I am planning on going to my union but I am hoping to have a lot of the det in the already figured out. Only about 10% of employees max the 457 and I'm not sure how many would support a 403b.

Recliner

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Re: Road block adding 403b to my 457
« Reply #5 on: March 02, 2018, 12:22:55 PM »
Just heard back from my plans administrator. He said he took the info and spoke with the fund administrator (possibly the TAMP or custodian) which is One America. They apparently had more info and advised that for city employees it is not allowed under the IRS code 403b-1.

As he explained it to me it is basically just educators (work for school districts or universities) that aren't excluded.

Is there anyone here that knows differently?

DreamFIRE

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Re: Road block adding 403b to my 457
« Reply #6 on: March 02, 2018, 04:54:09 PM »
Found out ours isn't a 403b after-all.   Apparently, it's a suppl. 401 a but accomplishes the same thing of investing beyond the 457's limit.  I won't find out the finer details until April.

DreamFIRE

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Re: Road block adding 403b to my 457
« Reply #7 on: April 05, 2018, 06:47:31 PM »

Well to follow up with my post immediately above about about my maxed out 457B, the other account is a 401a that is used currently only for the company match, and it has a 2018 limit of $55,000.  So, I'm allowed to invest an additional $55,000 minus the existing company match into it, so combined with my 457B, that's a total of $79,500 pre-tax dollars I'm allowed to invest in my company retirement plan including the company match in the 457B and 401a combined.  Anyway, I took advantage of the option, although not to the full $79,500!

MountainTown

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Re: Road block adding 403b to my 457
« Reply #8 on: April 05, 2018, 10:45:02 PM »
I have a similar issue with my wife's accounts. She is a city employee and I expected to be able to max out her 457 as well as 403b. I was surprised to learn there is no 403b. I can't say I ever questioned it. I do wonder if it's unique to educators?
I also thought there maybe something to do with how there is also a pension for firefighters(and in this case for city employees) or some other defined contribution plan(which is slightly different from a 401k).

My wife has a defined contribution plan(she could have chosen this or defined benefit). Again I was disappointed she can't do anymore than what ever her defined contribution is(something like 8%). So we just do that(it's mandatory) and the 457 max out. I can't even get our HR lady to hear my plea about fees so I never considered raising the issue. I do question whether it's allowed though.

NoStacheOhio

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Re: Road block adding 403b to my 457
« Reply #9 on: April 06, 2018, 07:25:18 AM »
+1 to the 401a suggestion. I have one through my non-profit, and it's classified as a DC pension. I can't contribute to my plan (employer only), but that's just because of my plan rules, not IRS rules.

FLBiker

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Re: Road block adding 403b to my 457
« Reply #10 on: April 12, 2018, 08:41:11 AM »
I work for the state (at a university) and we get both 457 and 403b.  There were some glory years where I maxed out both, then we had a daughter and DW took two years as a SAHM.  Now, she's back to 9 month employment -- we max out the 457 first, then put whatever we can into the 403b.

SpareChange

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Re: Road block adding 403b to my 457
« Reply #11 on: April 12, 2018, 12:23:23 PM »
I work at a hospital. We have a 403b. They added a 457 plan last year. I contribute to both. Our 401a account is just where the employer match goes.