Getting the Most Out of Public-Sector Employee Retirement Plans
If you're a public school teacher, invest in both a 403(b) and a 457 plan to save for retirement.
The school system where I work offers both a 403(b) and a 457 retirement plan. Can I invest in both plans?
Yes. Some public-sector employees – such as teachers in public schools and colleges – may have the option to save for retirement in both a 403(b) and a 457 plan. You can contribute the maximum to both plans –– $17,000 for each plan in 2012. Contributions to a 403(b) and 457 are made pretax and grow tax-deferred for retirement.
Under some circumstances, you can also make catch-up contributions to both plans. For instance, you can boost your 403(b) contributions by $5,500 starting in the year you turn age 50, bringing your contribution limit to $22,500 for 2012. Or, if you have 15 years of service with the same system, you might qualify for a catch-up contribution of $3,000 a year, for a total annual contribution of $20,000. If you’re eligible for both types of catch-up contributions, you can contribute up to $25,500. For more information, see 403(b)wise.com.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
You can also take advantage of the catch-up contributions for 457 plans, boosting your 457 contributions by $5,500 starting in the year you turn 50. Or, if you’re within three years of the normal retirement age specified in the plan documents (often the age when you can collect full benefits in your pension plan, which is age 60 for many employees and in the fifties for some public-safety workers), you can double your contributions for three years if you haven’t maxed out your contributions in the past. (You can’t take both types of 457 catch-up contributions in the same year, but you can take the 457 and the 403(b) catch-up contributions simultaneously.) For more information, see the 403(b)wise.com 457 information resources.
For more information about making the most of your 403(b) options, see Fighting for a Better 403(b).
-
Should You Renew Your CD?With rate cuts impacting earnings, we examine if now is a wise time to renew CDs.
-
7 Ways to Plan Now to Save on Medicare IRMAA Surcharges LaterUnderstand the critical two-year lookback period and why aggressive planning before you enroll in Medicare is the most effective way to minimize IRMAA.
-
Law Reversal Looming? Trump Eyes 2026 Gambling Winnings Tax ChangeTax Deductions It's no secret that the IRS is coming after your gambling winnings in 2026. But how long will that last?
-
Getting Out of an RMD Penaltyretirement When your brokerage firm miscalculates your required minimum distributions, you have recourse.
-
Borrowers Get More Time to Repay 401(k) Loans
retirement If you leave your job while you have an outstanding 401(k) loan, Uncle Sam now gives you extra time to repay it -- thanks to the new tax law.
-
It’s Not Too Late to Boost Retirement Savings for 2018
retirement Some retirement accounts will accept contributions for 2018 up until the April tax deadline.
-
How to Correct a Mistake on Your RMDs from IRAsretirement If you didn't take out the correct required minimum distribution because your brokerage firm made a mistake, the IRS may show some leniency.
-
Making the Most of a Health Savings Account Once You Turn Age 65
Making Your Money Last You’ll face a stiff penalty and taxes if you tap your health savings account for non-medical expenses before the age of 65. After that, the rules change.
-
Reporting Charitable IRA Distributions on Tax Returns Can Be Confusing
IRAs Taxpayers need to be careful when reporting charitable gifts from their IRA on their tax returns, or they may end up overpaying Uncle Sam.
-
Make the Most of the New Military Retirement Plan
retirement The government is offering a new retirement option so that service members who leave the military before qualifying for a pension can still receive some benefits.
-
How Changes in Income Affect Medicare Premiums
Medicare Medicare beneficiaries can see their premiums go up if their income rises, although for some that increase will be only temporary.
