Investing clarifications

[dukebound85]

I am married with 1 dependent. We got married in past year and learning there are some nuances

My work offers a 401k and a 457

My wife's work offers a 403b and 401k

My understanding is:

- We are both allowed to contribute to the max on 401k (19,500 each for a total of 39,000) in same year

- I am allowed to contribute the max to my 401k and 457 (19,500 each for 39,000 total) in the same year

- We are both allowed to also contribute to Roth IRA (6,000 each/12,000 total) if combined AGI is under limit and file taxes as married jointly. This is in addition to above participating

- I am able to use my work HDHP to cover myself and dependent at max family HSA contribution of 7200/year. My wife has her work provided insurance PPO plan free to her and is not on my HDHP plan. I do not believe she has FSA. Recently learned this would make my HSA plan ineligible if so.

Are the above assumptions correct?

If I do find she has a FSA, what do I do? I just read this and not sure of the implications if violated a rule.

Thanks for all insights!

 

[Exchme]

If she chooses the FSA, then the amount allowed for HSA contributions gets cuts cut in half. Generally the HSA is a better deal since you can roll over unused amounts to the future, so you can be more aggressive on the amount you contribute. When we did the FSA route, we only contributed the amount for the routine stuff we knew was going to be needed (physicals, glasses, everyday prescriptions). But to qualify for an HSA, the insurance has to be a qualifying High Deductible Health Plan. When you work out the math, the HDHP + HSA is generally the best way to go, but you need to look.

I'll let someone familiar with the rules for a 457 comment on whether you can double the $19500 limit by doing both a 401K and 457, seems very unlikely.

 

[euro]

Yeah, I don't think that is how it works. My DW used to work in a place that offered both and the $ limit was for the COMBINED contributions, not a separate max for each - at least in HER case.

 

[SecondCor521]

Your HR benefits people should be able to answer the question about your contribution limits to the 401k / 457.

As far as the HSA rules go, I'm fairly certain that the eligibility to contribute is determined generally based on two things: (a) your type of coverage (family vs. individual), and (b) whether you have an HDHP and only an HDHP for insurance coverage.

It looks to me like a spouse's insurance situation is irrelevant as to whether you can make an HSA contribution. It also looks to me like an FSA is irrelevant to whether either of you can make an HSA contribution.

Of course, your wife's PPO plan prevents her from any HSA contributions, so whether or not she has an FSA is a moot point.

You would probably be well served to read the IRS instructions related to HSA contributions at https://www.irs.gov/pub/irs-pdf/i8889.pdf. If you're only dealing with HSA contributions, you can stop around the middle of page 6.

In the unlikely event that you have over contributed to your HSA, that situation is discussed on page 6. If the excess contributions were made this year, you can remove them without penalty.

 

[dukebound85]

If she chooses the FSA, then the amount allowed for HSA contributions gets cuts cut in half. Generally the HSA is a better deal since you can roll over unused amounts to the future, so you can be more aggressive on the amount you contribute. When we did the FSA route, we only contributed the amount for the routine stuff we knew was going to be needed (physicals, glasses, everyday prescriptions). But to qualify for an HSA, the insurance has to be a qualifying High Deductible Health Plan. When you work out the math, the HDHP + HSA is generally the best way to go, but you need to look.

I'll let someone familiar with the rules for a 457 comment on whether you can double the $19500 limit by doing both a 401K and 457, seems very unlikely.

Yeah, I don't think that is how it works. My DW used to work in a place that offered both and the $ limit was for the COMBINED contributions, not a separate max for each - at least in HER case.

It seems like I can do 19.5 for the 457 and 19.5 for the 401k after some more research
https://www.irs.gov/retirement-plan...re-eligible-for-more-than-one-retirement-plan

 

[euro]

It seems like I can do 19.5 for the 457 and 19.5 for the 401k after some more research
https://www.irs.gov/retirement-plan...re-eligible-for-more-than-one-retirement-plan

By golly, looks like you are correct! My DW and I may have missed out on an opportunity then