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

A reader sent me an e-mail some time ago about the interplay between a 401(a) plan and a Roth solo 401(k) plan. You probably heard of 401(k), 403(b), and 457 plans. The names of these plans come from the section numbers in the tax code which specify the rules for these plans.

401(k) plans are offered primarily by private sector employers. Employees in public schools and tax-exempt organizations have 403(b) plans. State and local governments and tax-exempt organizations have 457 plans. Some employers offer both a 403(b) plan and a 457 plan. What is a 401(a) plan then?

Strictly speaking a 401(a) plan is a bit of a misnomer because other kinds of plans including 401(k) plans must also qualify under tax code 401(a). In a loose context, a 401(a) plan is a retirement savings plan in which employees can’t choose or change the amount contributed to the plan. It’s also called a “money purchase plan.”

In a 401(k) plan, employees make so-called “elective deferrals” which means that employees have a choice between (a) contribute to the plan and defer income tax on the contributions; and (b) receive the money in cash and pay the tax. In a 401(a) money purchase plan, either the employer contributes to the plan all by itself OR the employer makes it mandatory for all covered employees and deducts a set percentage from everybody’s paycheck.

As a result, contributions to a 401(a) plan do not count toward the 401(k) “elective deferrals” limit ($16,500 in 2009). If someone has a both 401(a) plan and a 401(k) plan, he or she can still contribute up to $16,500 in 2009 to the 401(k) plan. Contributions to a 403(b) plan or a SIMPLE IRA also count toward the same 401(k) elective deferral limit, but contributions to a 457 plan do not (go figure).

I don’t work in the employee benefits field any more. It still amazes me how many different types of retirement plans we have in the tax code and how they have similar but different rules. We’ve got this alphanumeric soup:

Why can’t we just have one type of plan regardless where you work? The more you look at anything related to the tax code, the more you see it’s a total mess.

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  1. the weakonomist says

    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!

  2. john says

    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?

  3. Harry Sit says

    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.

  4. PatentGuy says

    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?

  5. Harry Sit says

    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.

  6. caroline says


    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

  7. R Mogyoros says

    I work where I have a 401a where ONLY my employer makes contributions. I cannot elect to contribute any of my own salary to the 401a. My question is can I still contribute to a traditional IRA and get a tax deduction becuase this is the only kind of pension plan offered by my employer?

  8. Harry Sit says

    R Mogyoros – You can still contribute to a Traditional IRA. Whether you can get a tax deduction depends on your income and filing status. See IRA deduction limits from the IRS. If you find yourself not able to take a tax deduction because of your income, you may consider contributing to a Roth IRA instead. Whether you can do that or not also depends on your income and filing status. See Roth IRAs from the IRS.

  9. alonza hanks says

    i have a employer contributed profitsharing plan unemployment cut off gona lose every thing adminastrator says i cant roll it over into ira and that i cant have adistrabution or any thing 100 % vested plan says after 25 yrs of employment i can cash out admin saysonly if im employed by co. still and that they can do any thing they want that im just screwed
    please help if possable thank you

  10. sep retirement plan student says

    As a self-employed worker, I have been researching the Sep Retirement plan, so am very glad to find such helpful information.

  11. Kerry says

    if someone work for state gov. and they already contribute maximum 401K and 457, but later he figure out that they also have 401(a), can he also contribute it ? how much is max.

    • Harry Sit says

      @Kerry – The contribution rate to a 401a plan is typically fixed. If you decide to participate in a 401a, you don’t have a choice in how much you contribute. That said, there is an overall limit of $49,000 a year for contributions to certain defined contribution plans at the same employer. That includes both employee and employer contributions to 401a, 403b, and 401k plans at the same employer. Contributions to a 457 plan are separate and don’t count toward the $49,000 limit.

  12. Michael says

    Hi – I participate in the US Government’s Thrift Savings Plan (TSP), but wanted to know if I could also participate in a SIMPLE plan through a company that I consult with in the evenings. I currently contribute the max to the TSP. Thanks for your help.

  13. Harry Sit says

    @Michael – The maximum contribution limit applies to the aggregate of TSP and SIMPLE. If you already contribute the max to TSP, you can’t contribute additional money to SIMPLE unless you reduce your contribution to TSP. If the SIMPLE plan has a match but TSP doesn’t, it may be worth it to shift some contributions to the SIMPLE plan in order to get the match; otherwise just stick to TSP.

  14. Mel says

    Do earnings in a Roth type (after-tax funded) 401a follow the same IRS rules as a Roth 401k regarding withdrawals? Pub 590 says that if you are 59.5 years old (or older) and the Roth 401k is at least 5 years old then earnings are tax free.

  15. Harry Sit says

    @Mel – Sorry, no. The after-tax funded 401a accounts are not Roth. Earnings are still taxable. Your original contributions are not taxable.

  16. Mel says

    A CPA and others say: A qualified Roth 401(k) distribution is not subject to taxes or penalties. The distribution is qualified if the Roth 401(k) account is held for more than five years and any one of the following applies:
    * The employee is over 59½ years old.
    * Death.
    * Disability.
    After a lot of reserarch I learned that company matches on a Roth 401(k) are kept in a separate “standard” (pre-tax) type account. When distributed, the employee contributions and “qualified” (see above) earnings are untaxable. Only the employer contributions and earnings are taxable upon distribution.

  17. Harry Sit says

    @DG – Yes if the 401(a) plan allows a lump sum distribution (some only give a monthly benefit after you reach a certain age) and your new 401(k) plan accepts incoming rollovers. In that case it’s treated just like any other rollovers.

  18. Sue says

    About a 401(a). I had about $2500.00 in my 401(a) account from a previous employer where I have not worked for in over 2 years now. And I never made any contributions, just my employer did. Yesterday, I got an account statement showing that my 401(a) has a $0 balance and it says for the transactions – “Forfeiture” – $2500. I’m not understanding what happened? How did I lose all the money in this account. Can you please explain this and what I can possibly do to get my money back?

  19. Harry Sit says

    @Sue – A plan can have a vesting schedule. If you haven’t worked there long enough, the contributions can be forfeited. There’s nothing you can do.

  20. Sue says

    Thank you for the reply. I did only work there for about one year and the was on disability leave for about one year. So does that count as employed there for 2 years? And also could I have prevented the forfeiture by having moved the money to another account such as another IRA or similar account?

  21. Harry Sit says

    @Sue – I would think it counts as two years. However the employer’s vesting schedule can require a minimum of five years of service. You could not have prevented the forfeiture by moving the money to an IRA. When you request the move, they know your years of service and they would apply the vesting schedule and see you haven’t satisfied the minimum service requirement.

  22. Guy says

    I work for a municipality and have had a 457 plan that recently changed to a 401A plan. I contribute 8% of my salary to the plan and it is matched by my employer. Am I better off with this plan or should I change back to the previous 457 plan which is an option. I am 61 yrs old and plan on taking an early retirement at 62.

  23. andrea says

    So what you are saying is that the 401(a) is not mine to take but the employers (company) money they are puting in my account? To receive this money i have to switch over to a 401(k) plan? This is to confusing.

  24. Joy says

    I am the Clerk for the CIty and I have a question that the IRS and our retirement company is not giving me a straight answe-I need to get W2’s out and have a question reference to 401a retirement. The city and the employees put into this retirement fund, so box 12 on the W2 should have the amount the employee had deducted, should this not be subtracted from total gross wages in box1 (wages, tips, other compensation) because we are pre taxed in payroll. Thank you for your help!!!

  25. Jason says

    I have two jobs, one with the state and one with a state affliated non-profit. The non-profit has an employer 401(a) contribution of $49,000. Some of my co-workers with the same employment situation also take part in voluntary deferral to the state’s 401(k). Half of us think this is wrong, the other half are counting it as two separate employers and say we could do both the 401(a) and 401(k) [to the sum of roughly $64,000 per year]. We wrote the IRS several times and have not gotten a ruling. Do you know? Do you have a reference? (State of Kansas). Thanks.

  26. Harry Sit says

    @Jason – The $49k (now $50k in 2012) is per-employer. So it comes down whether the non-profit and the state are two employers. If you have two jobs and you are getting two W-2’s with different employer tax IDs, they are two employers. A reference? Internal Revenue Code section 415(f)(1)(B):

    “(B) all defined contribution plans (whether or not terminated) of an employer are to be treated as one defined contribution plan.”

    Note it says “an employer.” The employer is responsible for the annual addition limit. One employer is not supposed to know or track what other employers are doing to the same person. So each employer gets its own limit.

    Compare that to Code section 402(g)(1)(A) for employee elective deferrals ($16,500 in 2011; $17,000 in 2012):

    “Notwithstanding subsections (e)(3) and (h)(1)(B), the elective deferrals of any individual for any taxable year shall be included in such individual’s gross income to the extent the amount of such deferrals for the taxable year exceeds the applicable dollar amount.”

    Note it says “any individual” which means across all employers. Any individual person knows how much he or she is contributing to which plans. The individual is responsible to stay under the elective deferral limit across all plans.

  27. Janet says

    I am not able to find the question I need answered anywhere, even my accountant didn’t know. My husband is 71 and will not retire, he has a 401a employer plan at work, the turbo tax software is telling me he needs to take an rmd of this plan since he is 70 plus, but we don’t know if this applies to employer sponsored, as he would have to retire to take his pension. Even the plan administrator dosen t know, as most people seem to retire a 55 from his job. We do take rmd from his trad ira and the 457k but dont know about the 401a. Do you have any idea? I cant find it on the irs website either.

  28. Harry Sit says

    @Janet – For an employer sponsored retirement plan, RMD can wait until he retires. From the FAQs from the IRS:

    “Required Minimum Distributions (RMDs) generally are minimum amounts that a retirement plan account owner must withdraw annually starting with the year that he or she reaches 70 ½ years of age or, if later, the year in which he or she retires. However, if the retirement plan account is an IRA or the account owner is a 5% owner of the business sponsoring the retirement plan, the RMDs must begin once the account holder is age 70 ½, regardless of whether he or she is retired.”

    I’m assuming he’s not a 5% owner.

  29. Janet says

    No, he is not an owner at all, he works for the city owned electric utility. Thank you for letting me know, all the info out there seems to cover when to start taking it, but couldn’t find any info about people who don ‘t plan on retiring or who are still working at that age. Thanks again.

  30. Bob says

    I retired 6 years ago from a County Fire Dept. Termination pay (sick leave, vacation) was put into a 401a. A year later, the County said the IRS was questioning whether this is allowed and they stopped the program. They won’t allow me to roll it over to my 457. The plan administrator says if the IRS decides it was not allowed, there may be a penalty if I take the money out. Every year I call and I’m told “the IRS will make a ruling soon,” but nothing so far. Can I role the 401a into an IRA? If I withdraw it all, I will owe a large amount in taxes, but will I likely get penalties as well?

  31. Randy says

    Apologies if this has been answered in the thread but this 401x stuff is a little murky. I have one employer where I contributed the max to my 403(b). I am also an employee of the city (elected official) and participate in a 401(a) based PERA program. The city contributes an amount and I also contribute a matching percentage. My question is, are the 403(b) and 401(a) treated separate since they are two different employers and different kinds of deferred plans? Or will the IRS consider these in aggregate and I’m in trouble because I over contributed?

  32. Randy says

    Ok – so far so good. Please note that I said that the city contributes to the 401a and I also chose to contribute a certain percentage. Is the 401a plan considered non-elective simply because it is organized as a 401a or because of some other IRS definition? By the way, this web link and thread has been the most helpful by far in trying to answer this question. The plan providers don’t even seem to know the answer for sure. Thanks.

  33. Harry Sit says

    Randy – So tell me more about how you “chose to contribute a certain percentage” to your 401a. Do you have the freedom to change your contribution percentage either up or down at will as you do in a 403b or a 401k plan? Or was it a one-time irrevocable choice you were given when you first started? If the choice was one-time irrevocable, it’s not considered as “elective deferral.” If you can start, stop, increase, or decrease your contributions however you want, then it would be elective deferral subject to the $17k/year limit across all plans ($16,500 in 2011).

  34. Randy says

    I believe it is elective. In this case the city automatically contributes 4% and I chose to match it by contributing 4% which is withheld from my paycheck. I would have to check for sure but I’m pretty sure I could choose to change the amount I contribute up or down. Perhaps anticipating your response, I assume I would request a corrective distribution form from one of the plans (would it matter which one?) and have the amount above $22,000 paid back to me (I’m over age 50). And if that’s the case, will I end up getting a correct W-2 or just a 1099-R?

  35. Gail says

    In 2011, I rolled over 100% of a pre-tax 401(a) account balance (just over $13k) from a long-past employer into a traditional IRA via direct rollover to avoid the 20% tax w/h requirement. I have been searching and the internet for a couple hours for specific instructions on how to report this direct rollover on my 2011 tax return. Finally found this thread–lots of great info! Anyway, Turbotax doesn’t mention 401(a)’s and I didn’t receive a 1099-R or a 5498. Assuming I need to report the rollover, how do I record it on my tax return but with a $0 tax liability? Please be as specific as possible. Thank you in advance!

  36. Harry Sit says

    Gail – Not sure why you didn’t receive a 1099-R. Did you ask them? With a 1099-R, you do it exactly the same way as rolling over a 401k distribution.

  37. Randy says

    I have another , more visual, clue in trying to understand the question of the 401a and 403b and whether the IRS considers those in aggregate as far as determining if the maximum contribution has been exceeded. On one of my W-2’s I see my total 403b contribution listed in Box 12 with Code E (Non-taxable elective salary deferrals to a 403(b) retirement plan) but on my other W-2 where I am contributing to my 401a there are no codes or amounts listed whatsoever – either the city’s contribution or mine. So I’m again wondering if the 401a is somehow treated differently. If I take this at face value, there is no number from the W-2 to enter in the tax preparation software.

  38. Harry Sit says

    Randy – All evidence so far point to your contribution to the 401a being non-elective. No way to change contribution percentage on the web site. No entry in box 12 on W-2. As I mentioned, the one-time choice when you first started doesn’t count.

  39. Annie says

    TFB- Have a 401a with a large hospital employer in California. I have the abilty to make changes by amount, fund type, and percentages via Fidelity. I contribute 3% with a 3% employer match + additonal 1% annual from emplyer. Fully vested.

    However, I just noticed that my w2 has the same total amount in 3 boxes. That is to say, I do not see any amount that reflects the 401a contribution.

  40. Harry Sit says

    Annie – Changing how the money in the account is invested among the different funds doesn’t make the 401a contribution elective. In the previous comments with Randy I was referring to changing the % of pay you contribute to the plan. Are you able to change your 3% contribution to say 6% and change it back to 3% if you want?

    You also brought up another important point on Social Security and Medicare tax. Contributions to a 401k plan, where someone can change the contribution %, are subject to Social Security and Medicare tax. For people contributing to a 401k plan, their Social Security and Medicare wages are higher than the W-2 Box 1 amount. With a 401a plan, your contributions are not subject to Social Security and Medicare tax. That’s good.

  41. Annie says

    TFB- Again thank you! Through Fidelity, I can change my contribution from 3% to 6% and back to 3%. Literature through the company benifits and Fidelity states it’s a 401a.

    I understand 401k being a subset of the IRS 401a, therefore, I interpret having the ability to personally administer all these changes would be subject to SS and MC taxes. My W-2 shows no such deductions.

  42. Harry Sit says

    Annie – Have you made such changes and seen it changing the deductions on your paycheck? I wonder if Fidelity is just using the same web interface for 401k and 401a and whatever you do there doesn’t really change your paycheck because you have a 401a not a 401k.

  43. Harry Sit says

    Annie – Thank you for posting the link. Mystery solved. Your 401(a) contributions are all with after-tax money (earnings, employer match and the additional 1% employer money are pre-tax). That’s why you don’t see it on your W-2 and it doesn’t affect your Social Security or Medicare taxes. You should withdraw your employee after-tax money every year and roll it over to a Roth IRA if such withdrawal doesn’t suspend your contributions or employer match. This way the earnings will grow in a Roth IRA tax free instead of in the 401a and eventually be taxable.

  44. Albert says

    TFB-I work at a College which has a 401A Social Security Replacement Plan. I was under the assumption these types of plans were available to Government entities only…Am I wrong in this statement?

  45. Harry Sit says

    As Social Security replacement, maybe they are only available to certain [state] government employees and public school teachers, but in general, a private company can offer a 401a plan as well. Your college has it. In a few comments above yours, Annie’s hospital also has it.

  46. HTC says

    I’m 62 and want to retire. I called the NYstate local retirement system and am now very confused. I was told that I could take a lump sum of $5,000 dollars or take monthly payments of $400. and change. Does that mean I will get the $400. monthly payment until I die?

    I never thought I would want to retire at this (young) age HA HA.

    Thanks for any info.

  47. Harry Sit says

    HTC – You will have to have them send you more info in writing. If those are the only two choices, just take the monthly payments of $400 then because $400 a month for one year is close to $5,000 already.

  48. GK says

    TFB– Thans for the post but I still cannot understand 50,000 limit rule for 2012.

    I have 403b plan where I make voluntary deferrals. I do to max -17000 for 2012

    I have access to 401A defined contribution plan- My employer contributes about 8.5% to max 250K of my salary into this regardless if I contribute or not. My salary is 250K, so employer contributes 21,250 into 401A. I have the option of contributing “additional” upto maximum of 50,000 (including employer contribution of 21250). Of course once I decide, the “additional” contributions are fixed and cannot be changed.

    Does this mean I can contribute 50,000-21,250=28,750 per year in 401A extra? ( exlcuding my 17K deferral for 403B plan)

    Or does this mean I can only contribute 50,000-21,250-17,000= 11,750 into 401A ? ( Includes 17K of 403b plan )

    Thanks for your thoughts and efforts in advance

  49. Harry Sit says

    GK – The former, excluding your deferral for the 403b plan. The $50k limit is per employer. A 403b doesn’t count for this purpose because you are considered to have exclusive control. See Treasury regulations 26 CFR 1.415(f)-1(f).

    “(f) annuity contracts — (1) In general. In the case of a section 403(b) annuity contract, except as provided in paragraph (f)(2) of this section, the participant on whose behalf the annuity contract is purchased is considered for purposes of section 415 to have exclusive control of the annuity contract. Accordingly, except as provided in paragraph (f)(2) of this section, the participant, and not the participant’s employer who purchased the section 403(b) annuity contract, is deemed to maintain the annuity contract, and such a section 403(b) annuity contract is not aggregated with a qualified plan that is maintained by the participant’s employer.”

  50. J P Curtis says

    I recently went to apply for social security and found out that the company I worked for 13 years did not pay social security tax instead had a 401a and a 457. They are telling me that my social security benefits are going to be greatly reduced – is this correct. I told her that it was a 403b however I now find out that it’s a 401 a. I did a roll over when I left that company, however it is a mixture of previous roll overs from other companies and I can’t figure out how to separate out the 401a . Do I have to report thr 401a and the 457 to social security for this time period. On several websites i see reports that 401a does not affect social security benefits but it’s confusing. Do you have any answers for me?


  51. Harry Sit says

    J P Curtis – A 401a by itself has nothing to do whether an employer and its employees participate in Social Security or not. An employer that is allowed to opt out of Social Security and does opt out of Social Security can have a 401a; an employer that participates in Social Security can also have a 401a. There is no need to separate out the 401a or 457 and report it to Social Security. You and your employer didn’t pay Social Security tax during that period. Therefore you don’t get credit for Social Security for that time.

    If you ask other people, many would probably prefer the opportunity not to pay Social Security tax and invest their money and their employer’s match on their own, but they don’t have that choice. So I don’t see your situation as a negative.

  52. 401a Dilemma says

    I separated from my university 4 years ago and no longer live in the state of New York. I now currently reside in Texas as my home state. I have been trying to do a plan termination with my plan,each time Vanguard sends the paper work over to the university,they continue to reject my request, therefore preventing me from taking my money and moving at my own discretion. I was under the impression that I can take those funds and move it when I am ready.

    Can they continue to do this since I am no longer with my previous employer and what are my options?

    Thank you

    • Harry Sit says

      Contact the university and find out their rules. Although not common, plans can make you wait until a certain age even if you don’t work there any more. Or maybe they just want you to fill out their form and can’t do the rollover without it.

  53. EMK says

    Trying to find out more about 401 (a) and how it relates to payroll:

    1- Does it need to appear anywhere on the w2 and if so where?
    2- If it is entirely employer funded, does it need to be processed thru payroll?
    3-Does it have any impact on tax?
    4-Does it have any impact on taxable wages?
    5-If employees don’t get w2 for 401 (a), do they get 1099 instead?

    Thanks for your help.

  54. B in BC says

    Great site!

    I have a 457 through my employer and a Roth IRA.

    Can I contribute $17,000 to my 457 AND $5,000 to my Roth IRA?

  55. kevin says

    I contributed to a 403B , while employed by a N YC school system for several decades. I am currently employed by another NYC government agency, and contribute to a 457 plan, and receive contributions to an employer sponsored 401A plan. My question is, Can I rollover the contents of the 457, and/or the 401A plan to the 403B plan, and if so, when, in relation to retirement (ie: before,at,after) . Thank you.

  56. Lucio says

    What’s up, all is going fine here and ofcourse every one is sharing facts, that’s гeallу fine, kеep up

  57. General says

    I have 2 jobs. One working for the federal government and other for the state.

    Under federal job, I contribute maximum of 17K(+5.5K catchup) a year through TSP plan since they match 5% of my base salary.
    Under non-benefited state job (per-diem), I am eligible for 401a, 403b, 457k plans. I have to contribute mandatory 7.5% of my base salary to 401a. I also contribute maximum of 17K(+5.5K catchup) to 457k plan. I forgo non-matching 403b plan since I already have TSP plan from my federal job and TSP plan is similar to 403b/401k plan and can’t have both.

    From what I know, I can do this. Is this kosher and acceptable? Thanks.

  58. Jim Baroni says

    I began contributing to my city’s 401a plan during that last couple of month of 2010. The plan has an irrevocable clause and it takes a set percentage of my wage earnings with no employer match. I also contribute to the 457plan. I am 55 and had been maxing my 457 contribution with the +50 catch up provision since the year I turned 50. I have scoured the internet for an hour trying to determine what the maximum amount of money I can deffer in 2012 and 2013. I also contributed to a Traditional IRA post tax in 2009 and 2010 but not in 2011 because I believed the maximum to be $49,000 at the time and I was tapping out with max to the 401a and 457. Am I able to take the maximum 457 + the maximum 401a + a tradtional post tax IRA in 2013 if I have the means to fund it? If so what would that figure be?

  59. Harry says

    Jim – You can do all three to the maximum including catchup. IRA $6,500; 457 $23,000; 401a your irrevocable fixed % of pay up to $51,000.

  60. Marla says

    I worked for a High School in California part time for 24 years. I worked 17 hours per week as a part time employee. I didn’t earn enough credit for social security benefits since the school did not deduct for social security taxes. I was enrolled in a (PARS-ARS) Public Agency Retirement Services-Alternate Retirement systems. An Intrtnal Revenue Code 401(a) qualified governmental sponsored defined contribution retirement plan. The PARS-ARS account balance consists of both employer and employee contributions plus interest and less expenses. I became eligibble to receive the balance of my PARS account in the form of a lump sum distribution after I was terminated with the school job. I rolled over the amount of the lump sum of $16,372 to a IRA. A monthly payment was not an option. I applied for my spousal social security benefit and was told since this was a lump sum that this is considered a pension. Therefore, my social security benefit will be reduced. I don’t believe that this should be considered a pension since it is a contributed retirement plan and it should not reduce my benefit . Please clear this up and let me know if I have grounds to appeal my award.

  61. Harry says

    Marla – Yes it counts as a pension but with the lump of only $16,372, I can’t imagine your Social Security benefits would be reduced by much. What did they say it would be reduced by, $20/month, $50/month?

  62. Marla says

    When I was having a phone screen with SS they calculated 77.00 a month which seemed like a lot. Forgot to ask over how many years they calculate it. I am 62. Haven’t received my award letter yet with the final amount. I have the opportunity to appeal it if I don’t agree.

  63. Harry says

    Marla – The formula is here: Determining a Pension Amount (GPO). Look at the table under D(3)(b). Divide the lump sum by the factor in the table according to the date of the lump sum and your age at that time. Then multiply the result by 2/3. That’s your reduction. For example suppose it was paid after 6/2011 when you were 60, the factor is 142.8. $16,372 / 142.8 * 2/3 = $76.43. So $77 is in the ballpark.

    Think of it this way. If your work at the school was covered by Social Security but you still apply for SS as a spouse, you get no credit for what you and your employer paid into Social Security. In other words you wouldn’t even get the $16,372. At least here you still keep 1/3.

  64. General says

    I’m trying to reduce taxes by putting as much money in my retirement accounts as possible. I’m 50 and has 2 jobs. One as California state employee and other for federal job.
    From what I gather, I can get 23K tax deduction from TSP from federal job and CA state job with fixed 7.5% from 401a plan and another 23K from 457b plan.
    Anything else I’m missing that I can reduce taxes?

  65. Caren says

    Is it a bad idea to rollover an IRA received in divorce into a 401a? Will that make it appear that pension is larger than it is? 401a has $1000, IRA 50,000 but can’t keep in my name.

  66. Gus says

    I have a quick question that seems very similar to other people’s questions. I have a 401a through my employer. I recently found out that I also have the opportunity to contribute to a 403b (pre-tax and/or roth) and a 457 (pre-tax and/or roth). All these plans would be through the same employer (the state). As several people said before, I don’t choose my contribution to the 401a (5% of my salary plus 8% match), but what about the 403b and 457? I understand the 457 has a fairly high limit (51k?) and for the 403b would it be the $17,500 limit? Also, what if I chose to open an additional IRA on my own? Would the contributions to the IRA be aggregated with the contributions to the 403b? And on top of all this, could I also open a Roth IRA and contribute $5,500 (I’m not 50 yet)? If you can confirm whether this is right, I would really appreciate it. Thanks!

    • Harry says

      Yes you can do all of them: 401a, 403b, 457, IRA (traditional or Roth). The limits are all separate. Only the traditional IRA and Roth IRA share one $5,500 limit.

  67. Anna B Carter-Bruno says

    I have recently retired from a human services organization. I have a 401A retirement plan through my employer. I did not contribute to this plan myself. The funds in this account were entirely from my employer and have not been taxed. A small amount of the funds are in a Roth (about $9,000) the rest of the funds (about $121,000) have not been taxed. This 401A and my social security plus a small savings account are now my only source of income. Where could I contact for advice on how to best handle the retirement account in order to avoid as much tax as possible?
    Thank you

  68. Tim Meamber says

    Harry –
    I’ve learned a lot from the trail of questions and your responses…………thank you. I am in a public sector field. I am currently participating in a 457 “catch-up” provision which allows me to contribute up to $36,000. I also participate in a 401a (% from paycheck). I will soon leave that field with a final 2015 457 contribution of $36,000 and 401a contributions of $13,000 and become self-employed. At that point, can I open and contribute to a solo 401k? And if so, do my previous contributions to either the 457 or 401a have an effect on what I can contribute to the 401k until year’s end? Additionally, I would also like to set up a solo 401k for my self-employed wife, but am unsure if my contributions (past or future) would have an effect on my spouse’s ability to contribute. Reading your original piece and a couple of the past questions/responses, I think I’m okay, but wanted to be sure by asking my specific question. Thank you in advance for your response.

    • Harry Sit says

      You can open solo 401k for your self-employment income. You previous contributions to the 401a or 457 plan have no effect on either your or your wife’s contributions to this new solo 401k.

  69. Susan Macfarland says

    I am 70 years old and have an employer only funded 401a account with $2300. I want to transfer it via an institution to institution process to a personal IRA account that already has funds in it but before I do, I have read that I have to make rmd’s so that it is not considered “an excess contribution”. Is that correct? Seems strange since I’m not able to contribute to a regular IRA because of my age.

    I plan to transfer the 401a to the personal IRA account to simplify my rmd’s. I have yet another Ira but it is in mutual funds but want to take the rmd’s from the accounts not making any interest. I realize is based on the total amount in all my IRA accounts but I can take my rmd’s all from one account. Is this the best way to accomplish this?

  70. Mrs. Carp says

    My husband works for a city that contributes to the AZ state retirement system, a 401a I believe. Turbo tax says we qualify for the retirement savings contribution credit. Are his monthly contributions also considered deductible on our taxes?

    • Harry Sit says

      Mrs. Carp – 401a plans come in different flavors. To qualify for the retirement savings contribution credit, his contribution has to be voluntary and elective (something he can start or stop and change up or down). If it’s just a fixed percentage he can’t change it doesn’t count. The contributions, whether pre-tax or after-tax, are already accounted for on the W-2. You don’t take another deduction on your own.

  71. Hema Chandran Krishnan says

    I passed 701/2 years. and still working. My employer is still taking the money out (with my permission) for my 403 B plan and 457 plan. Will I be eligible to get an income tax deduction after I pass 701/2 years old? At what age my tax deduction for 403-B and 457 plans end? Could I get the tax deductions for 403 B and 457 until I retire?

    • Harry Sit says

      You can continue until you stop working for that employer. The money is taken before tax. You don’t take a deduction yourself.

  72. June Worthington says

    I worked as an independent contractor for about 5 months earlier in 2015 and now have a employed position with the State of Oregon (for the additional 7 months ) which provides both a 401A match and an optional 457 plan ( which I am funding personally) .
    Can I set up a SEP or SEP-IRA plan ( are these the same?) for the time I worked independently and if so do I need to decrease the amount I can save in it by the amount I have saved in my 457 plan ($ 24,000 which includes the catchup provision). If this is an IRA does the SEP-IRA have a different income limit than a traditional IRA?
    Thank you for your reply . I have spent a great deal of computer time trying to make sense of this and so far I am not certain . I am afraid my tax person may also not be up to date on this so I wish to know as much as possible .

    • Harry Sit says

      SEP and SEP-IRA are the same. You can do one based on your 1099 income. It doesn’t have to be reduced by your 457 contributions. It doesn’t have an income limit.

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