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TSP and 401a Rules

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  • TSP and 401a Rules

    On the recent WCI podcast, he mentioned that 401k's apply towards the 58k yearly deferral limit but 403bs do not. Therefore you could both fully max out a 401a (58k) as well as a 403b (19.5k) but the sum of both 401a and 401k could not exceed 58k.

    My wife is dual employed at a university center and a VA. We had been contributing to her 401a, 403b, and 457 but switched from her 403b to a TSP at the VA in order to get the employer matching.

    This year we are due to contribute around 57k to her 401a (employer contributions) as well as max out the 19.5k of her TSP. Does this violate the rules for maximum contributions? I am unclear whether or not the TSP is counted as a 401k or not.

    Thank you all for any help or information you can provide!

  • #2
    Originally posted by kocherspoint View Post
    On the recent WCI podcast, he mentioned that 401k's apply towards the 58k yearly deferral limit but 403bs do not. Therefore you could both fully max out a 401a (58k) as well as a 403b (19.5k) but the sum of both 401a and 401k could not exceed 58k.
    I do not know what WCI said in this podcast, but either you misunderstood or less likely WCI misspoke.

    There is a single employee deferral limit (2021 = $19.5K) across all 401k, 403b and SIMPLE IRA plans. There is a separate employer + employer annual addition limit (2021 = $58K) for each unaffiliated employer.

    401a pre-tax mandatory employee contributions are not considered elective deferrals and thus are not included in the employee deferral limit

    My wife is dual employed at a university center and a VA. We had been contributing to her 401a, 403b, and 457 but switched from her 403b to a TSP at the VA in order to get the employer matching.
    457b contributions are not included in either the employee deferral limit or the annual addition limit.

    403b contributions are not aggregated with other qualified plan contributions of the same employer. The 401a and 403b would have separate annual addition limits even if at the same employer.

    This year we are due to contribute around 57k to her 401a (employer contributions) as well as max out the 19.5k of her TSP. Does this violate the rules for maximum contributions? I am unclear whether or not the TSP is counted as a 401k or not.
    The participant does not contribute 401a employer contributions. They can only make mandatory pre-tax employee contributions and employee after-tax contributions. The 401a and TSP are at separate unaffiliated employers. Each has a separate annual addition limit.

    While the TSP is a different section of the tax code, it's rules and regulations are almost the same as a 401k

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    • #3
      No it does not violate, you are good!

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      • #4
        spiritrider

        Thank you so much for your help in understanding this.

        So to confirm, you could have 58k (employer contributions, academic center) in a 401a, 19.5k (employee contributions, academic center) into a 403b, 19.5k into a 457b (academic center), as well as 19.5 k (employee contributions) into a VA TSP and not violate any IRS contribution limits?

        Seems too good to be true. Thanks!

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