multiple retirement accounts

[wannabe]

I have been trying to understand my best option for multiple retirement accounts and feel like I am not getting any definitive answers with google. Maybe someone has a similar situation and can shed some light on this for me.

My situation is I am an employed physician (38 yo) with option for 401k, 403b and 457 plan. Currently I max out my 401k (with match of 10k) and 457. So far so good, right?

I hope to soon be doing a small medically related side job with 1099 income. The side income will only be 15-20k annually but I am looking to max out all options. What is my best option for stashing away as much of this income as possible in an additional retirement account given my current employed position?

[StarTrekDoc]

Are you sure you have 401k, 403b and 457?  just making sure.

[wannabe]

Yes, I can defer 18k total in 401k or 403b and 18k in 457.

[MochaDoc]

jfoxcpacfp wrote in this thread (https://www.whitecoatinvestor.com/forums/topic/contribute-to-work-403b-vs-solo-401k/):

 

"[For your 1099 income] You can contribute up to 20% of your net taxable income to [a] solo-k..."

 

Something to keep in mind is the aggregate contribution amount. I read the following as across all 4xx retirement accounts (457, 403b, and solo-401k) but I could be wrong:

"the aggregation rules allow you no more than $54k contribution across all accounts ($60k if age 50+)."

[StarTrekDoc]

457 is separate from the aggregate amount since not in the 415c code so doesn't count toward the 54k.

I don't know if an IRA counts or backdoor Roth count to the limits at all, but another potential from my understanding.

[jfoxcpacfp]

MochaDoc wrote:

Something to keep in mind is the aggregate contribution amount. I read the following as across all 4xx retirement accounts (457, 403b, and solo-401k) but I could be wrong:

Click to expand...

StarTrekDoc wrote:

457 is separate from the aggregate amount since not in the 415c code so doesn’t count toward the 54k.

I don’t know if an IRA counts or backdoor Roth count to the limits at all, but another potential from my understanding.

Click to expand...

Correct - 457b does not count for aggregation purposes. Neither do "Individual" retirement account contributions. Retirement account limitation rules segregate "personal" versus "employer" accounts except for the crossover for TIRA deductibility when you participate in an employer plan.

At least, that's the only one I can think of - would like to know if anyone can add to that short list (you reading this, @spiritrider?)

[spiritrider]

There are two limits.

There is a per person employee deferral limit (2017 = $18K). There is one limit for qualified plans (401k, 403b. SIMPLE IRA and SARSEP) and another limit for 457b plans.

There is a per employer annual addition limit (2017 = $54K). This is the sum of all employee and employer contributions. A 403b is considered controlled by the participant and is aggregated with any of their one-participant plans. The 457b is also not consider aggregated.

If you have a 401k, 403b and 457b at one employer and a one-participant 401k, the following limits would apply.

• One $18K deferral limit across 401k, 403b and one-participant 401k. Another $18K deferral limit for 457b.


• One $54K annual addition limit for the 401k and one $54K annual addition limit for 403b and one-participant plan combined.

[wannabe]

I understand my options for my employed position , I think. 18k for combined 403b and/or 401k and a additional 18k to 457.

Am I understanding this correctly? For the 1099 income I can contribute up to 54k in solo 401k but I would not be able to contribute 100% of the funds to get to the max contribution. I can only contribute 20% of net. In my situation my total 1099 income will only be about 15-20k annually so I will only be able to contribute a few thousand annually to this solo 401k? Is there a better option? I would love to contribute as much as possible as I am planning on contributing 100% of these funds for retirement, maybe after tax is my only other option!

 

 

 

[spiritrider]

Your one-participant 401k employer contribution is a maximum of 20% of net self-employment income (net business profit - 1/2 SE tax)

Also, because a 403b is considered controlled by the participant, your one-participant 401k contributions are further limited to $54K - 403b employee deferrals - 403b employer contributions.

Depending on your MAGI, you and/or your spouse may also be able to contribute to traditional IRA, Roth IRA or backdoor Roth IRA.