Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
403(b), 457, SEP IRA, Roth IRA
Old 09-03-2009, 08:00 PM   #1
Recycles dryer sheets
 
Join Date: Mar 2009
Posts: 357
403(b), 457, SEP IRA, Roth IRA

I'm eligible for the following retirement accounts:
401k, 403b, 457, Roth IRA, Sep IRA

What is the max I can contribute to each account (I'm under 50)? My understanding is:
401k + 403b -- $16.5k/yr
457 - $16.5k/yr
Roth - $5k/yr
Sep IRA - ~20% of my net SE income

Is that correct? Is there a website that lists the maximum contribution amounts for all of ones retirement accounts
__________________

__________________
bank5 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 09-03-2009, 08:12 PM   #2
Administrator
Gumby's Avatar
 
Join Date: Apr 2006
Posts: 10,163
Try looking here.

Reference Room
__________________

__________________
Living an analog life in the Digital Age.
Gumby is offline   Reply With Quote
Old 09-03-2009, 08:39 PM   #3
Moderator
Sarah in SC's Avatar
 
Join Date: Sep 2005
Location: Charleston, SC
Posts: 13,457
Lucky so-and-so. We read about you people in our CFP courses. Watch the income upper limits on that Roth. Nice going though, bank5!
__________________
“One day your life will flash before your eyes. Make sure it's worth watching.”
Gerard Arthur Way

Sarah in SC is offline   Reply With Quote
Old 09-03-2009, 09:27 PM   #4
Recycles dryer sheets
 
Join Date: Mar 2009
Posts: 357
Quote:
Originally Posted by Gumby View Post
Try looking here.

Reference Room
Thanks for the link. What I'm specifically looking for is a website that lists accounts that are (for lack of a better term) "mutually exclusive". For example, I'd consider a traditional IRA and Roth IRA mutually exclusive because one can contribute $5k to one or the other but not $5k to each one.
__________________
bank5 is offline   Reply With Quote
Old 09-03-2009, 09:32 PM   #5
Recycles dryer sheets
 
Join Date: Mar 2009
Posts: 357
Quote:
Originally Posted by Sarah in SC View Post
Lucky so-and-so. We read about you people in our CFP courses. Watch the income upper limits on that Roth. Nice going though, bank5!
Well, I haven't been able to max them all out yet, but I'm hoping to at some point My wife and I are fortunate to have 2 1/2 pretty good jobs so we're trying to sock a lot away early, especially if kids are in our future.
__________________
bank5 is offline   Reply With Quote
Old 09-03-2009, 09:38 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,299
Quote:
Originally Posted by Sarah in SC View Post
Lucky so-and-so. We read about you people in our CFP courses. Watch the income upper limits on that Roth. Nice going though, bank5!
Have you come across this little twist on the limits?

The question is, does money earned and deposited in a 403b also count as "earned income" for Roth IRA contributions for both earner and spouse? Example:

Say the wage earner makes $20,000 in a year, and contributes $16.5k to a 403b. This is the only earned income between wage earner and spouse. Can both the wage earner and spouse also make a $5,000 Roth IRA contribution (10K total) in that year?

TaxAct didn't complain, you need $10,000 of earned income to make a combined $10K Roth IRA contribution, and the earned income on a W2 supports that. But it seems a bit odd to me that a total of $26.5K was contributed, with only $20,000 of earned income ( the Roth IRA money obviously came out of our portfolio).

The 403b is a Roth 403b, if that makes a difference (I don't think so).


TIA for any light you can shine on this, it bugs me. It's clearly an uncommon circumstance, but not really convoluted - I already have a lot of Trad IRA $, I want to (tax) diversify as much as I can into Roths (including Trad>Roth conversions when they make sense), so I'm just trying to max things out. When I've asked here before, I think Martha suggested I ask for an "IRS ruling" on it. I guess, but it just seems odd to me that a taxpayer, acting within what appears to be the allowed rules would need anymore clarification than what is in the instruction sheet.

-ERD50

edit - bank5's "mutually exclusive" term fits well (saw it after I posted)
__________________
ERD50 is online now   Reply With Quote
Old 09-08-2009, 11:53 AM   #7
Moderator
Sarah in SC's Avatar
 
Join Date: Sep 2005
Location: Charleston, SC
Posts: 13,457
Let me work on this, guys. I think I have a person who can help with this that is an actuary. I see exactly what you are asking, I just don't know about how it counts as earned income.

The ones that are exclusive to each other are the 401k and the 403b. The 457 can be added to either one. The Roth and Trad total contributions can't be more than the total for one (ie, $5000), but you could put, say, half into the Roth and half into the traditional, as long as you were within the Roth limits.

The SEP is really where I have a question, though, as it isn't one that I fool with very often.

And yes, it is fairly rare to have an employment situation that offers all of these differing plans to the same individual. It is a favorite of the CFP board to ask about, but not very likely in "real life".
__________________
“One day your life will flash before your eyes. Make sure it's worth watching.”
Gerard Arthur Way

Sarah in SC is offline   Reply With Quote
Old 09-08-2009, 12:40 PM   #8
Thinks s/he gets paid by the post
 
Join Date: Jan 2004
Posts: 2,049
The 401k + SEP have a combined limit of $49,000. That includes the $16,500 and 20/25% of SE income.
__________________
eridanus is offline   Reply With Quote
Old 09-08-2009, 05:32 PM   #9
Moderator Emeritus
Martha's Avatar
 
Join Date: Feb 2004
Location: minnesota
Posts: 13,212
I suggest reading publication 560, it helps a lot in determining your maximum contributions. Publication 560 (2008), Retirement Plans for Small Business

As Sarah says, the Roth and traditional IRA contributions have to be coordinated--there is one total maximum. She also mentioned that the 457 plan does not effect the amount you may contribute to other plans. The sticklers are the 403b, 401k and SEP IRA.

The following article describes in plain English how to calculate retirement contributions when you have more than one employer or are self employed and employed: Common Questions About Retirement Plans

You can make salary-deferral contributions of up to $16,500 plus an additional catch-up amount of $5500 if you reach age 50 by Dec 31, 2009. This amount can be split among multiple retirement plans in which you participate, provided your aggregate salary-deferral contributions to all the plans do not exceed $16500 plus catch-up. Employer contributions are not counted towards these limits and the employers do not have to coordinate their contributions.

The SEP IRA will have a 20 or 25% maximum. If you end up contributing $16,500 to a 401k at work, to calculate your SEP I believe that you will have to take into account this contribution. Say you are eligible to contribute the maximum of $49,000 to the SEP. You must deduct the 16,500 you contributed to the 401k so your max under the SEP would be $32,500. The nice thing is that you do not have to deduct what your employers contributed to the 401k and 403b. EDIT: I retract what I said about the SEP limits.

This does get complicated so read publication 560. And read my signature.
__________________
.


No more lawyer stuff, no more political stuff, so no more CYA

Martha is offline   Reply With Quote
Old 09-08-2009, 06:36 PM   #10
Recycles dryer sheets
 
Join Date: Mar 2009
Posts: 357
Thanks all for the help. That helps clarify things a bit. My SEP contribution will only be a couple thousand so I won't have to worry about reaching the $49k limit for my 403b + SEP.
__________________
bank5 is offline   Reply With Quote
Old 09-08-2009, 09:07 PM   #11
Recycles dryer sheets
heyduke's Avatar
 
Join Date: Aug 2009
Posts: 348
bank5 unless you go over 16.5 k I think you will be okay ... others here will point out if I am wrong so take it with a grain of salt...
__________________
heyduke is offline   Reply With Quote
Old 09-09-2009, 12:40 AM   #12
Thinks s/he gets paid by the post
DblDoc's Avatar
 
Join Date: Aug 2007
Posts: 1,224
+1 to what Martha and eridanus stated. I have a 403b, 401a, SEP IRA and traditional IRA. My employer contributes to the 401a, I contribute to the 403b and have self employment income that goes to the SEP IRA and must stay below the $49k limit.

DD
__________________
At 54% of FIRE target
DblDoc is offline   Reply With Quote
Old 09-09-2009, 08:19 AM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,627
bank5 has been asking the same question since he joined the forum many moons ago.

Your employee contribution of $16,500 to 401(k)+403(b)+SEP-IRA is mutually exclusive in the same way that your $5,000 contribution to traditional+Roth IRAS is mutually exclusive.

Your employer contribution to your 401(k)+403(b)+SEP-IRA is not mutually exclusive. Apparently your employer's contribution to your SEP-IRA is now limited by your income.

Questions: Is the employer-contribution limit to the SEP-IRA actually $49,000 - $16,500? Or is the employer contribution limit $49,000 when the employee contributes $0?

Note: we understand who the employer is for a self-employed person.

The $16,500 to the 457 is all by itself.
__________________
LOL! is offline   Reply With Quote
Old 09-09-2009, 09:28 AM   #14
Moderator Emeritus
Martha's Avatar
 
Join Date: Feb 2004
Location: minnesota
Posts: 13,212
Quote:
Originally Posted by LOL! View Post
bank5 has been asking the same question since he joined the forum many moons ago.
I thought it sounded familiar.

Quote:
Your employee contribution of $16,500 to 401(k)+403(b)+SEP-IRA is mutually exclusive in the same way that your $5,000 contribution to traditional+Roth IRAS is mutually exclusive.
We agree.

Quote:
Your employer contribution to your 401(k)+403(b)+SEP-IRA is not mutually exclusive. Apparently your employer's contribution to your SEP-IRA is now limited by your income.

Questions: Is the employer-contribution limit to the SEP-IRA actually $49,000 - $16,500? Or is the employer contribution limit $49,000 when the employee contributes $0?

Note: we understand who the employer is for a self-employed person.
Are you asking about whether you could have a situation where your employer contributes to a SEP and you do not so you don't have to reduce the contribution by your 401k or 403b contributions? And does this apply if you are your own employer? My understanding is that if you are self employed you must coordinate the SEP contribution with your employee deferral 401k contributions and reduce it accordingly. EDIT: I am changing my position on this because the SEP is entirely employer contribution even if you are the employer. As I figured out later, the SEP is limited by any and all 403b contributions but you could have a 401k through a job and still contribute the max to a SEP.
Quote:
The $16,500 to the 457 is all by itself.
We agree.
__________________
.


No more lawyer stuff, no more political stuff, so no more CYA

Martha is offline   Reply With Quote
Old 09-09-2009, 10:43 AM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,627
Here's the scenario:

Suppose I am employed by a university/government hospital. I contribute from my salary $16,500 to the 403(b) and $16,500 to the 457. In addition to this income, I have a side business that makes $300K a year. I am the sole employee. Can I put $49K into my SEP-IRA or am I limited to putting only $32.5K into my SEP-IRA?
__________________
LOL! is offline   Reply With Quote
Old 09-09-2009, 03:02 PM   #16
Thinks s/he gets paid by the post
target2019's Avatar
 
Join Date: Dec 2008
Posts: 3,709
Quote:
Originally Posted by eridanus View Post
The 401k + SEP have a combined limit of $49,000. That includes the $16,500 and 20/25% of SE income.
To clarify, that is 20% of SE profit, not your business income.
__________________
target2019 is offline   Reply With Quote
Old 09-09-2009, 03:10 PM   #17
Thinks s/he gets paid by the post
target2019's Avatar
 
Join Date: Dec 2008
Posts: 3,709
Quote:
Originally Posted by LOL! View Post
Here's the scenario:

Suppose I am employed by a university/government hospital. I contribute from my salary $16,500 to the 403(b) and $16,500 to the 457. In addition to this income, I have a side business that makes $300K a year. I am the sole employee. Can I put $49K into my SEP-IRA or am I limited to putting only $32.5K into my SEP-IRA?
Post the salary, and I'll run this through Intuit Proseries.
__________________
target2019 is offline   Reply With Quote
Old 09-09-2009, 03:35 PM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,627
target2019,

Since the hypothetical does not apply to me, I will make up a salary.
Suppose at work I make $85,000 and my side job is a pure consulting activity where I go to a customer site, look at their business plan and say, "Yes, it's a good plan" and charge them $300,000 plus my travel expenses of $1000. I submit the travel expense receipt to them and get a check for $301,000 and a 1099MISC for $300,000.
__________________
LOL! is offline   Reply With Quote
Old 09-09-2009, 03:54 PM   #19
Thinks s/he gets paid by the post
target2019's Avatar
 
Join Date: Dec 2008
Posts: 3,709
Quote:
Originally Posted by LOL! View Post
target2019,

Since the hypothetical does not apply to me, I will make up a salary.
Suppose at work I make $85,000 and my side job is a pure consulting activity where I go to a customer site, look at their business plan and say, "Yes, it's a good plan" and charge them $300,000 plus my travel expenses of $1000. I submit the travel expense receipt to them and get a check for $301,000 and a 1099MISC for $300,000.
Just did more research to confirm the following (also seen on the computer form): The 401(k) is not related to the SEP-IRA question, unless the employers have a business connection. All 2008 limits are used here.

The maximum 2008 SEP-IRA contribution is $46K, computed from a max cap of 230,000. The max 2009 number is $49K, computed from 245,000 cap.

If you put your email in a private message to me, I will email a pdf of the worksheet.
__________________
target2019 is offline   Reply With Quote
Old 09-09-2009, 04:33 PM   #20
Moderator Emeritus
Martha's Avatar
 
Join Date: Feb 2004
Location: minnesota
Posts: 13,212
I have thought about the SEP IRA issue and the section 402g limits on voluntary contributions to the 401k and 403b. I think publication 560 is muddy and I am changing my mind but I am not absolutely sure. As LOL said, the SEP is entirely employer contribution, even if you are both the employee and employer. Essentially, it is profit sharing. Because that is the case a person who has both a 401k and a SEP as a self employed person should not have to deduct the 16,500 max employee contribution from the SEP contribution and should be able to do the maximum.

But I am not comfortable with my answer without reading the regs. Target, do you have a source for your position? I do agree that the answer is different if they are related business entities.
__________________

__________________
.


No more lawyer stuff, no more political stuff, so no more CYA

Martha is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Questions about limits surrounding ROTH IRA, SEP IRA and ROTH 401k RockSplat FIRE and Money 14 06-08-2009 01:30 PM
Can I put money in both a Roth 403(b) and regular Roth IRA? lhamo FIRE and Money 3 07-14-2008 12:42 PM
SEP IRA and ROTH IRA merleman FIRE and Money 2 03-16-2008 04:06 PM
Roth 403(b), Roth IRA and 'earned income' ERD50 FIRE and Money 16 02-24-2008 08:00 PM
Need advice: traditional 403(b) vs. Roth 403(b) vs. Roth IRA vs. taxable account Silhan FIRE and Money 12 06-07-2007 11:08 AM

 

 
All times are GMT -6. The time now is 11:44 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.