Comments on: Retirement Plans Galore: 401(a), 401(k), 403(b), 457, SEP, SIMPLE

By: caroline

caroline — Tue, 02 Mar 2010 00:00:03 +0000

Hi,

Great article. No one seems to address the 401a, and I was a little confused upon realizing that was what was left from my short former job at a university.

I am a 27 year old with a very small leftover 401a account (a little over $1k). I understand that since my income is now low and i expect it to be higher in the future (just graduated from grad school a month ago and currently unemployed, unmarried) that rolling over into a Roth as opposed to traditional makes sense.
However, it seems to me that with the advantages of possibly being able to contribute to both accounts 401a and my 401k or Roth 401k in future years, I should perhaps just keep this 401a until I am at a point where my income is such that I would prefer to contribute to both for tax reasons, and maybe just open my own roth ira separately.

Can you please advise me on this? Is there value to keeping this little 401a account around?

Thank you so much!

Engr charlie

By: TFB

TFB — Mon, 07 Sep 2009 13:59:58 +0000

PatentGuy - There is no income limit for Roth 401(k) or Roth 403(b). That's an advantage over Roth IRA. If you max out everything and still want to shelter more, see Roth 401(k) for People Who Contribute the Max. The employer contributions still go into the regular/traditional 401(k)/403(b) account. For the TSA, you will have to see what's in it (fixed interest? how much?) versus what her active equity funds are. If you post the details in Bogleheads forum, you will get good answers.

By: PatentGuy

PatentGuy — Sun, 06 Sep 2009 07:38:16 +0000

Aloha FB, Me again. Two questions.

Regarding Roth 401(k) and 403(b), is there an income limit to participate? should I cut off contributions to my traditional 401(k) and put them in Roth 401(k) (we offer Roth 401(k). Can you also put the profit sharing plan contributions (about $30K this year) into a Roth 401(k)?

One of my wife’s 403(b) plans is a TSA. She cut-off contributions early on and switched to a different plan (same employer) in which she actively contributes in equity mutual funds. To make live a bit easier, she could transfer the balance from the TSA plan to the equity finds plan, BUT the TSA has a “early withdrawal” penalty (I think 6%) if she transfers the funds within 6 or 7 years of their original contribution. As a result, we have never consolidated the TSA 403(b) into her active 403(b). Are we being penny-wise, pound-foolish? Should we bite the bullet and get out of the TSA despite the penalty, or wait it out before doing so?

By: TFB

TFB — Wed, 26 Aug 2009 03:44:52 +0000

john – I said in the post contributions to a 457 plan do not count toward the 401(k) elective deferral limit. So, yes, that individual can contribute to both the 457 plan and the 401k plan. The limits are $16,500 for *each* plan, for a total of $33,000. If the individual is 50 years or older, there is a catch-up of $5,500 to each plan, making the total limits $44,000.

By: john

john — Tue, 25 Aug 2009 23:31:35 +0000

If an individual has a 457B plan through a Government agency can he also contribute to his 401K through his other employer? if so what are the limits to both accounts in a single calendar year?

By: the weakonomist

the weakonomist — Wed, 25 Feb 2009 17:23:11 +0000

Wow, that was a 401(mess). I didn’t know there were other variations in the tax code beyond 1(k) and 3(b).

Good clarification!