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

By: TFB

TFB — Thu, 17 May 2012 18:34:12 +0000

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.

By: J P Curtis

J P Curtis — Thu, 17 May 2012 13:06:33 +0000

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?

Thanks

By: TFB

TFB — Sat, 12 May 2012 13:28:17 +0000

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.”

By: GK

GK — Sat, 12 May 2012 10:03:47 +0000

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

By: TFB

TFB — Sat, 14 Apr 2012 17:42:50 +0000

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.

By: HTC

HTC — Sat, 14 Apr 2012 17:08:32 +0000

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.

By: TFB

TFB — Wed, 11 Apr 2012 15:03:40 +0000

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.

By: Albert

Albert — Wed, 11 Apr 2012 11:40:29 +0000

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?

By: TFB

TFB — Wed, 28 Mar 2012 21:35:40 +0000

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.

By: Annie

Annie — Wed, 28 Mar 2012 20:17:25 +0000

TFB – Yes, I’ve made manual increases and one time lump sumps to the 401a to “catch up”. It shows on the Fidelity account and my paycheck.

Here’s the account type information:

https://www.mysavingsatwork.com/atwork/scripps/1248709047941.htm