Can TP make max contributions to a 401K and a 457 plan.

[Bert0611]

TP works for a company the offers a 401K and a university that offers a 457 plan.  Combined income for 2021 will be around $120K.

What I have been reading appears to indicate that the TP can make the max $19,500 to each plan.

Am I understanding this correctly?  Don't want to worry about excess contributions.

Thanks in advance.

Roberta

[qbteachmt · Accepted solution]

The 457(b) is non-qualified, so they can contribute to both.

"the 457(b) elective deferral limit is not offset by 401(k) or 403(b) deferrals. Thus, the maximum deferral limit of $19,500 may be contributed to a 457(b) plan, regardless of whether any deferrals or employer contributions have been made to a 403(b) or 401(k) plan."

From: https://www.captrust.com/navigating-the-number-jumble-403b-401k-457b-comparison/

The limits are different:

https://www.investopedia.com/ask/answers/100314/what-difference-between-401k-plan-and-457-plan.asp

https://www.irs.gov/retirement-plans/how-much-salary-can-you-defer-if-youre-eligible-for-more-than-o...

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-457b-contribution-l...

And when learning about them, make sure to pay attention to governmental vs nongovernmental. You didn't describe if that is a private university or state.

The 457(b) is referred to as a Top Hat Plan, and they can be a bit risky:

https://www.investopedia.com/terms/t/top-hat-plan.asp

[Bert0611]

Thanks for the reply.  I had previously read all of the articles except for the one from captrust.com.  I was trying to verify my understanding of those articles.  And the 457 is at the University of Minnesota.

Roberta

[qbteachmt]

"I had previously read all of the articles"

I've really enjoyed investopedia this tax year; they're doing a great job.