total contribution limit question (401a 403b 457b IRA)

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blastoff
Posts: 176
Joined: Thu Jan 19, 2012 12:04 pm

total contribution limit question (401a 403b 457b IRA)

Post by blastoff » Wed Dec 13, 2017 10:56 pm

New job with a new employer in 2018 (current job ends before new year)

University job (public).

My understanding from plan documents and HR is that I:
Have access to 403b.
Have access to 457b.
Employer contributes 8% to 401a if employee contributes 5% (one choice among several DC/DB options).

My understanding is that
-Employer contribution is separate from limits (the 8% to 401a)
-Employee (my) collective contribution limit to 401a and 403b is 18k (using 2017 values).
-Employee 457b contribution limit is a separate 18k.
-I would also have normal IRA access of 5.5k.

So, all in I could technically contribute 5.5k to IRA + 18k 457b + 18k (collective 401a/403b) + whatever the 8% empoyer 8% 401a is?

Is this correct?

Spirit Rider
Posts: 6863
Joined: Fri Mar 02, 2007 2:39 pm

Re: total contribution limit question (401a 403b 457b IRA)

Post by Spirit Rider » Thu Dec 14, 2017 12:05 am

Even though you have optional selections for the 401a plan. Once the selection is made these employee contributions are most likely considered mandatory employee contributions and are not considered employee deferrals. Therefore, they do not prevent you from making 403b employee deferrals up to the employee deferral limit (2018 = $18.5K).

If you do not have a >= 50% ownership in a business, the 403b is considered solely controlled by the participant (you). This means there is a separate annual addition limit of employee + employer contributions (2018 = $55K) for the 401a and the 403b.

If you do have a >= 50% ownership in a business, the 403b is considered controlled both by the participant (you) and your 403b employer. This means the 403b annual additions would be aggregated with both the 401a and any employer retirement plans of any business you have >= 50% ownership.

The reason these annual addition limits may be important is because the 401a and/or the 403b may also permit employee after-tax contributions and in-service rollovers. This would allow the so-called Mega Backdoor Roth.

Finally, as you noted the 457b contribution limit is equal to, but separate from the employee deferral limit.

So, technically you could contribute $5.5K IRA + $18.5K 457b + 401a (5% employee mandatory contribution + 8% employer comtribution + possible remainder of $55K employee after-tax contribution) + 403b ($18.5K employee deferral + possible $36.5K employee after-tax contribution). I have not seen two employer plans permitting employee after-tax contributions, but one of them is certainly possible. You will have to check with your employer/plans.

Gleevec
Posts: 265
Joined: Sun Mar 03, 2013 11:25 am

Re: total contribution limit question (401a 403b 457b IRA)

Post by Gleevec » Thu Dec 14, 2017 2:02 am

By “in a business” do you mean the same institution/company providing 403b, or if we have unrelated side 1099 income as an owner this would affect our w2 limit?

Spirit Rider
Posts: 6863
Joined: Fri Mar 02, 2007 2:39 pm

Re: total contribution limit question (401a 403b 457b IRA)

Post by Spirit Rider » Thu Dec 14, 2017 2:52 pm

It is any business owned >= 50% by a 403b participant. So yes, it would include a side business receiving income whether reported on a 1099-MISC or not. This only affects the annual addition limit.

blastoff
Posts: 176
Joined: Thu Jan 19, 2012 12:04 pm

Re: total contribution limit question (401a 403b 457b IRA)

Post by blastoff » Thu Dec 14, 2017 3:22 pm

Spirit Rider wrote:
Thu Dec 14, 2017 12:05 am
Even though you have optional selections for the 401a plan. Once the selection is made these employee contributions are most likely considered mandatory employee contributions and are not considered employee deferrals. Therefore, they do not prevent you from making 403b employee deferrals up to the employee deferral limit (2018 = $18.5K).

If you do not have a >= 50% ownership in a business, the 403b is considered solely controlled by the participant (you). This means there is a separate annual addition limit of employee + employer contributions (2018 = $55K) for the 401a and the 403b.

If you do have a >= 50% ownership in a business, the 403b is considered controlled both by the participant (you) and your 403b employer. This means the 403b annual additions would be aggregated with both the 401a and any employer retirement plans of any business you have >= 50% ownership.

The reason these annual addition limits may be important is because the 401a and/or the 403b may also permit employee after-tax contributions and in-service rollovers. This would allow the so-called Mega Backdoor Roth.

Finally, as you noted the 457b contribution limit is equal to, but separate from the employee deferral limit.

So, technically you could contribute $5.5K IRA + $18.5K 457b + 401a (5% employee mandatory contribution + 8% employer comtribution + possible remainder of $55K employee after-tax contribution) + 403b ($18.5K employee deferral + possible $36.5K employee after-tax contribution). I have not seen two employer plans permitting employee after-tax contributions, but one of them is certainly possible. You will have to check with your employer/plans.
Spirit Rider -

Thanks for the detailed reply - much appreciated!

I would own less than 50 percent of business - none of it to be exact!

(ignoring employee after-tax contributions) Seems like the 401a shouldn't effect 403b or 457b limits.

I think 457b and 403b have roth options if I so choose (a mix currently makes sense for me and will probably do one Roth and one pre-tax).

I should read about employee after-tax contributions (not roth). What is easiest way to typically learn if available... plan document? Call? Varies?

Spirit Rider
Posts: 6863
Joined: Fri Mar 02, 2007 2:39 pm

Re: total contribution limit question (401a 403b 457b IRA)

Post by Spirit Rider » Thu Dec 14, 2017 6:12 pm

Yes, as long as you don't own a business the 401a contributions will not affect your 403b contributions.

Without after-tax contributions your maximum 2018 contributions should be; 401a (13% of salary <= $55K), 403b ($18.5K), 457b ($18.5K) and IRA ($5.5K)

The traditional/Roth determination should be made based on your circumstances. You should prioritize any Roth contributions to the IRA. Roth IRA contributions have the most flexible withdrawal options and having no pre-tax IRA assets facilitates a Backdoor Roth if/when your income requires it.

As for whether your 401a or 403b plans permit after-tax contributions and in-service rollovers, you should first review any materials provided by your employer or plan administrator. You should have received the Summary Plan Description (SPD). If it isn't in there talk to your employer or plan administrator directly.

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