1018. Do you have multiple retirement plans and are unsure how they fit together? Laura answers a listener’s question about having a 403(b) and a 457 plan at work, and a potential second job with a 401(a). Knowing the rules of various retirement plans helps you take full advantage of them and avoid potential mistakes and penalties.
Key takeaways
- The names of workplace retirement plans come from the sections of the Internal Revenue Code that govern them.
- Plans from different sections of the tax code operate independently, allowing you to double or triple-dip maximum contributions.
- Plans from the same section of the tax code, such as a 401(k) and a 403(b), are subject to one shared annual contribution limit.
- A 403(b) can be offered by public schools, hospitals, and non-profits; it allows an extra catch-up contribution for long-term employees.
- A 457 plan has different types of accounts, but the governmental 457(b) is the most common. It allows an extra catch-up contribution and no early withdrawal penalties.
- A 401(a) is typically offered by government agencies, schools, and non-profits. It usually has mandatory participation and a high annual contribution limit.
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Email: Laura@LauraDAdams.com or leave a voicemail: (302) 364-0308.
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