I turned 51 years old six months ago and forgot to adjust my employer retirement account settings to max out my contributions this year.
As a result, I contributed $23,000 to my 403(b) and $23,000 to my 457(b) accounts. My understanding is I could have contributed another $7,500 to the 403(b) but not the 457(b).
Does that sound correct?
If that is the case, can I contribute $7,500 to a traditional IRA to make up some of the missed contributions? Is there anything else I could do to lower my taxable income? I already maxed my Health Savings Account.
Maxing Out
See: My Social Security benefit will be $4,500 a month. My wife’s is now $615. Can she get more?
Having so many retirement savings vehicles at your fingertips is a gift, and I’m glad to see you’re putting them to good use.
Yes, you are correct that the most you can put in your 403(b) this year is $30,500, split between the annual limit of $23,000 for all employees under 50 and the additional $7,500 catch-up contribution for those 50 and older. But some 457(b) plans are also the same — $23,000 for all employees under 50 and, when allowed, the additional $7,500 catch-up for people 50 and older. This is often related to governmental 457(b) plans. To be certain, reach out to your employer’s human resources department or the investment firm housing your 457(b) to confirm the rules around your specific plan.
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You may hear some people talk about an aggregated limit you can contribute to your retirement plans, when you have access to various types, but this rule does not apply to you. I’m only mentioning it for others reading this who may find it applicable. Basically, if you can contribute to a 401(k), 403(b), SIMPLE plans or SARSEPs in any combination, the maximum limit applies to all of the contributions. In other words, it wouldn’t be $30,500 to a 401(k) plan and a 403(b) plan, it would be cumulative. You are lucky in that 457(b) plans have their own separate limits, which gives you a much higher ceiling of contributions if you can afford it. Here’s more from the Internal Revenue Service on that.
