403(b) vs. 457(b) vs. 401(a) vs. Roth

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K-SawDude
Posts: 58
Joined: Thu Dec 02, 2010 10:51 pm

403(b) vs. 457(b) vs. 401(a) vs. Roth

Post by K-SawDude »

We're starting to get enough income that we now need to start filling up tax-advantaged space that I haven't been using in prior years. I'm 44, and my HSA is already maxed out and I have a required 401(a) plan from my employer for which the employer and I both contribute. My employer offers both a 403(b) and 457(b) plan as options, with limits at $20,500 each starting in 2022. I've just started contributing to these plans but, until I started reading around in the forum, didn't realize that some of these plans share the same limits. I've reviewed the relevant forum wikis and the IRS section but wanted to ask you all a few questions to make sure I'm understanding how annual limits on these accounts work:

(1) Is it true that my contributions to the 403(b) and 401(a) go into the same "pot" of money--meaning the total of my contributions to both accounts in 2022 cannot exceed $20,500?

(2) Am I right that employer contributions to the 401(a) do *not* count towards the $20,500 limit?

(3) Is it the case that contributions to the 457(b) go into a separate pot of money than the 403(b) and 401(a)--meaning that I could contribute $20,500 to the 457(b) and an additional $20,500 split between the 403(b) and 401(a)?

(4) Do contributions to a Roth IRA (non-employer-based) impact either of these limits? Or is that a separate pot of money?

(5) Do HSA contributions impact either of these limits? Or is that a separate pot of money?

Any answers and thoughts appreciated (including if there are any other questions I need to be thinking about as I start these 403 and 457 accounts).
terran
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Joined: Sat Jan 10, 2015 9:50 pm

Re: 403(b) vs. 457(b) vs. 401(a) vs. Roth

Post by terran »

1 - I don't think so. Follow whatever your employer says as it won't be worth fighting with them over it, but I believe mandatory contributions don't count towards the 415(c) limit ($20,500 in 2022) and the fact that's you make them to a 401(a) makes me think that's even more likely.

2 - Correct, the employer contribution is always separate.

3 - Yes the 457(b) limit is separate from other accounts.

4 - Roth IRA limits are separate from employer based plan limits.

5 - HSA limits are also separate from IRA and employer plan limits.

Something you didn't ask is what you should contribute to first, and the answer to that likely depends on whether the 457(b) is a governmental or non-governmental plan, so you should find that out. If it's governmental, then all other things being equal (fees, investment options, employer match) then you should likely contribute to 457(b) before the 403(b) as the 457(b) doesn't have early withdrawal penalties if you take money out before you turn 59.5, which is a nice little advantage over the 403(b).

Another question you should consider is when to contribute to Roth (either IRA or if your 403(b) offers that option) consider the Traditional versus Roth wiki entry. All things being equal again you should contribute to Roth 403(b) and traditional 457(b) rather than the reverse because while early withdrawal penalties still don't apply to Roth 457(b), you do pay tax on the withdrawals if taken before age 59.5, which defeats the purpose of the contributing to Roth
Yefuy.Goje
Posts: 67
Joined: Fri Oct 29, 2021 3:29 pm

Re: 403(b) vs. 457(b) vs. 401(a) vs. Roth

Post by Yefuy.Goje »

Hopefully this answers one or more of your questions.

The limit is separate, in that you can contribute in EACH account the $20,500 max in 2022. (I am very certain of this.)

Edit: please see the post below as this MAY not be true.
Last edited by Yefuy.Goje on Sat Dec 04, 2021 10:09 am, edited 1 time in total.
02nz
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Joined: Wed Feb 21, 2018 2:17 pm

Re: 403(b) vs. 457(b) vs. 401(a) vs. Roth

Post by 02nz »

Yefuy.Goje wrote: Sat Dec 04, 2021 8:36 am Hopefully this answers one or more of your questions.

The limit is separate, in that you can contribute in EACH account the $20,500 max in 2022. (I am very certain of this.)
See this IRS page: https://www.irs.gov/retirement-plans/ho ... ement-plan

The contribution limit is aggregated (shared) across most types of employer-sponsored accounts, the 457b being the main exception. My understanding is that required (non-elective) 401a contributions, as in the OP's case, do not count against those aggregated limits.
Yefuy.Goje
Posts: 67
Joined: Fri Oct 29, 2021 3:29 pm

Re: 403(b) vs. 457(b) vs. 401(a) vs. Roth

Post by Yefuy.Goje »

02nz wrote: Sat Dec 04, 2021 8:59 am
Yefuy.Goje wrote: Sat Dec 04, 2021 8:36 am Hopefully this answers one or more of your questions.

The limit is separate, in that you can contribute in EACH account the $20,500 max in 2022. (I am very certain of this.)
See this IRS page: https://www.irs.gov/retirement-plans/ho ... ement-plan

The contribution limit is aggregated (shared) across most types of employer-sponsored accounts, the 457b being the main exception. My understanding is that required (non-elective) 401a contributions, as in the OP's case, do not count against those aggregated limits.
Some details. I work for a public university and many universities allow the max contribution in each account. Perhaps there is additional requirement to be in this category.

Here is University of California system
Employees may contribute up to $19,500 annually ($26,000 if age 50 or older at any time in the calendar year) in pretax dollars to both the 403(b) and the 457(b) plans.
https://ucnet.universityofcalifornia.ed ... index.html

This is on top of the required amount we contribute to 401k/401a and/or pension, depending on what we opt in.

Obviously, IRS document supercedes UC document.

My current and former employers/universities have a similar language. I am not employed by UC. I have several friends through out the country who are also contributing the max in each account.
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retiredjg
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Re: 403(b) vs. 457(b) vs. 401(a) vs. Roth

Post by retiredjg »

K-SawDude wrote: Sat Dec 04, 2021 1:31 am (1) Is it true that my contributions to the 403(b) and 401(a) go into the same "pot" of money--meaning the total of my contributions to both accounts in 2022 cannot exceed $20,500?
No. But the 401(a) might (I'm not sure) be part of the total plan limit of $61k (not including catch up).

(2) Am I right that employer contributions to the 401(a) do *not* count towards the $20,500 limit?
Yes. The $20,500 is the limit for your elective deferrals which can go into tax-deferred or Roth 403b.

(3) Is it the case that contributions to the 457(b) go into a separate pot of money than the 403(b) and 401(a)--meaning that I could contribute $20,500 to the 457(b) and an additional $20,500 split between the 403(b) and 401(a)?
You are allowed (unless restricted by your employer) to contribute $20.5k to both the 457b and the 403b. More if over age 50.

4) Do contributions to a Roth IRA (non-employer-based) impact either of these limits? Or is that a separate pot of money?
Separate pot. Separate limit.

(5) Do HSA contributions impact either of these limits? Or is that a separate pot of money?
Separate.

Any answers and thoughts appreciated (including if there are any other questions I need to be thinking about as I start these 403 and 457 accounts).
Consider if you should be putting tax-deferred money into both plans. I expect you will have a pension and not need a very large tax-deferred account. It might be better to use a combination of tax-deferral and Roth.
02nz
Posts: 10508
Joined: Wed Feb 21, 2018 2:17 pm

Re: 403(b) vs. 457(b) vs. 401(a) vs. Roth

Post by 02nz »

Yefuy.Goje wrote: Sat Dec 04, 2021 9:33 am
02nz wrote: Sat Dec 04, 2021 8:59 am
Yefuy.Goje wrote: Sat Dec 04, 2021 8:36 am Hopefully this answers one or more of your questions.

The limit is separate, in that you can contribute in EACH account the $20,500 max in 2022. (I am very certain of this.)
See this IRS page: https://www.irs.gov/retirement-plans/ho ... ement-plan

The contribution limit is aggregated (shared) across most types of employer-sponsored accounts, the 457b being the main exception. My understanding is that required (non-elective) 401a contributions, as in the OP's case, do not count against those aggregated limits.
Some details. I work for a public university and many universities allow the max contribution in each account. Perhaps there is additional requirement to be in this category.

Here is University of California system
Employees may contribute up to $19,500 annually ($26,000 if age 50 or older at any time in the calendar year) in pretax dollars to both the 403(b) and the 457(b) plans.
https://ucnet.universityofcalifornia.ed ... index.html

This is on top of the required amount we contribute to 401k/401a and/or pension, depending on what we opt in.

Obviously, IRS document supercedes UC document.

My current and former employers/universities have a similar language. I am not employed by UC. I have several friends through out the country who are also contributing the max in each account.
Yes as I noted above the 403b and 457b limits are separate. I was trying to clarify that this does not apply to all employer-sponsored accounts. Let's say that someone maxed out the 401k for the year at one employer, changed jobs to one with a 403b, then they cannot make any further contributions that year.
VCC
Posts: 160
Joined: Thu Nov 21, 2019 3:19 pm

Re: 403(b) vs. 457(b) vs. 401(a) vs. Roth

Post by VCC »

TFB had a blog post on this a couple years ago. Per that blog post, the under age 50 limits for 2022 are 401a- 61k, 401k/403b combined limit 61k, 457b- 20.5k. Total of 142.5k. 401a has separate limit from 401k/403b & 457b.
Sprucebark
Posts: 299
Joined: Thu Aug 27, 2020 9:22 pm

Re: 403(b) vs. 457(b) vs. 401(a) vs. Roth

Post by Sprucebark »

403(b) - independent limit
457(b)- independent limit

You can max both of those out concurrently no problem.

HSA- independent of the above.

Roth IRA- independent of the above (but you still need to be aware of the income limits since you are covered by a retirement plan at work).

401(a)- gets tricky. If it’s a MANDATORY 401(a) then there is no limit, and it’s independent from the 403(b) and 457(b). If you work for the US government, a state, tribe, or political subdivision (like a university or school district) and you are paying into some sort of PERS / TRS then those are usually mandatory 401(a) plans.

So for 2022 you can-
Max out your 401(a) (mandatory- you can’t increase or decrease contributions)
Max out 403(b)
Max out 457(b)
Max out HSA
Max out Roth IRA (with all those other max outs your income will probably be in the eligible range).

Mandatory 401(a) deductions aren’t even reported or tracked on a w-2. It’s kind of strange to be honest. 403(b) and 457(b) contributions are reported and tracked on a w-2.
Topic Author
K-SawDude
Posts: 58
Joined: Thu Dec 02, 2010 10:51 pm

Re: 403(b) vs. 457(b) vs. 401(a) vs. Roth

Post by K-SawDude »

Thanks to all here--really helpful info and insights (both in terms of the questions asked and considerations I hadn't thought of).
retire2022
Posts: 3286
Joined: Tue Oct 02, 2018 6:10 pm
Location: NYC

Re: 403(b) vs. 457(b) vs. 401(a) vs. Roth

Post by retire2022 »

K-SawDude wrote: Sun Dec 05, 2021 12:06 am Thanks to all here--really helpful info and insights (both in terms of the questions asked and considerations I hadn't thought of).
See this also for transferring to and From

IRS Publication 590a page 22

https://www.irs.gov/retirement-plans/pl ... tributions

https://www.irs.gov/pub/irs-pdf/p590a.pdf

FAQ on Roth 457 should your plan offer one

https://www.irs.gov/retirement-plans/re ... 1rollovers
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