457b and 403b annual limits

[TheAbacus]

First of all, I would like to thank WCI for providing us all with an incredible resource for self learning, and I am grateful to the helpful, thoughtful and intelligent members of this forum as well.

My question stems from WCI's post on having multiple retirement accounts.

https://www.whitecoatinvestor.com/multiple-401k-rules/

 

My wife is starting a new job in mid 2017. What happens when an employed physician changes employers?

1. Can she maximize contributions to each 403(b) and 457(b) offered by each employer (they are unrelated)?

2. Do 401(a) accounts get counted in the $54000 annual limit?

3. On a slightly different topic, what should we do with her existing retirement accounts? Rollover to a traditional IRA is not an option I am considering since we make backdoor Roth contribtions, and would like to avoid the pro rata tax burden of Roth conversions.

[DMFA]

You'll note in that article that 403b's are not 401k's.  If you have one 403b, then the maximum contribution across all 403b/401k accounts is $18,000 total in elective deferrals across all accounts.

For some reason you can't double-dip with a solo-401k and your own employer contributions *plus* anything else in the 403b are limited to a total of $53,000, as per Chapter 3 of IRS pub 571 [link].  However, an unrelated employer in which you don't have 50% ownership should be able to give a separate $53,000 in employer contributions. Stupid rule imo.  You can still only have a total of $18,000 in elective deferrals across all 403b/401k.

403b and 401k rules don't apply to 401a and 457b.

[jfoxcpacfp]

TheAbacus wrote:

On a slightly different topic, what should we do with her existing retirement accounts? Rollover to a traditional IRA is not an option I am considering since we make backdoor Roth contribtions, and would like to avoid the pro rata tax burden of Roth conversions.

Click to expand...

She should either:

• Leave behind,


• R/o to a Roth IRA, or


• Go to work for an employer whose retirement plan takes rollovers from 401k's/403b's and roll into new plan.

The decision, as always, depends upon your specific set of facts, circumstances, and goals.

[TheAbacus]

Would you mind elaborating, by offering common examples where each of the three options you listed would be the ideal choice?

[jfoxcpacfp]

TheAbacus wrote:

Would you mind elaborating, by offering common examples where each of the three options you listed would be the ideal choice?

Click to expand...

Sure...

• Leave behind: When the 2 below options are not feasible (i.e. if your current employer plan d/n accept rollovers and you don't want to pay the taxes on a Roth r/o) and you have a fairly decent mutual fund selection at your former employer.


• R/o to a Roth IRA: When your account is relatively small and/or you can roll over during a bear market or correction and/or you have the $$ to pay the income taxes due.


• Go to work for an employer whose retirement plan takes rollovers from 401k’s/403b’s and roll into new plan: When your new job has a good 401k/403b plan and you don't want to manage a Roth IRA account yourself.

Hope that helps!

[TheAbacus]

Thank you! I appreciate both of your insights.

[TheAbacus]

Great article Johanna. Very interesting perspective on Roth conversions during a bear market.