Advertisement
retirement

How Some Workers Can Double Their Tax-Advantaged Retirement Plan Contributions

Workers who have access to both a 403(b) and a 457 plan can supercharge their savings.

I started a new job at a hospital, and it offers both a 457 plan and a 403(b) plan. Can I contribute the maximum to both, or do I have to pick one or the other?

Like you, many health care workers and public school teachers, as well as other nonprofit and public-sector employees, have access to both a 403(b) and a 457. You should be able to contribute the annual maximum of $18,000 (or $24,000 if you’re 50 or older) to both plans.

Advertisement - Article continues below

Be careful if you switch jobs in the middle of the year and you contributed to a 401(k) or 403(b) with your old employer. The annual $18,000 contribution limit (or $24,000 if you’re 50 or older) applies to both 403(b)s and 401(k)s, so you’ll have to subtract the amount you’ve already contributed from the total when figuring out how much you can contribute to your new employer’s 403(b). But as long as you haven’t contributed to another employer’s 457 in 2016, you’ll be able to max out contributions to the new 457.

As with 401(k) plans, both 403(b) and 457 plans let you save an extra $6,000 a year when you turn 50. And they have special catch-up contribution rules, too: You may be able to make up to double the contribution to a 457 in the three years before the retirement date specified in the plan, if you haven’t contributed the maximum in the past. For more information, see this IRS publication about 457 contributions. Some employees with 15 years of service with their employer also have a special catch-up contribution opportunity for 403(b)s; see the information sheet at 403(b)wise.com for more information.

Advertisement

Most Popular

HSAs Get Even Better
Financial Planning

HSAs Get Even Better

Workers have more options with flexible spending accounts, too.
July 2, 2020
Find a Great Place to Retire
happy retirement

Find a Great Place to Retire

Our cities provide plenty of space to spread out without skimping on health care or other amenities.
July 2, 2020
What Are the Income Tax Brackets for 2020 vs. 2019?
tax brackets

What Are the Income Tax Brackets for 2020 vs. 2019?

The IRS unveiled the 2020 tax brackets, and it's never too early to start planning to minimize your future tax bill.
June 20, 2020

Recommended

Find a Great Place to Retire
happy retirement

Find a Great Place to Retire

Our cities provide plenty of space to spread out without skimping on health care or other amenities.
July 2, 2020
Searching for the Perfect Place to Retire
Empty Nesters

Searching for the Perfect Place to Retire

We home in on two places with less traffic and lower costs. 
July 2, 2020
Hail to Your Finances, Regardless of Who Wins Presidency
retirement planning

Hail to Your Finances, Regardless of Who Wins Presidency

Don’t try to navigate your investment choices based on election uncertainty. And don’t wait to find out who wins in November to make financial decisio…
June 30, 2020
Resources for alternative forms of transportation needed by many older adults
retirement

Resources for alternative forms of transportation needed by many older adults

For many older adults, having an alternative mode of transportation may be the difference between independence and social isolation.
June 29, 2020