"In addition to deferring $14,000 in 2005 in a 457 plan, can you also defer in other plans like a 401k (if I understand correctly)? Can you point me to supporting IRS or other documents? I have a 401k and a 457b plan. My combined deferrals in 2005 exceed $14,000. My TaxCut program appears to assume you can only defer $14,000 for all plans. I'd like supporting documentation if I override the program. Thank you for your help."
You certainly can contribute both to a Section 457 retirement plan as well as a 401(k) plan. Each plan has separate limitations on the amount of money you can contribute. For 2005, the retirement plan limits were $14,000 for a 401(k) plan and $14,000 for a 457 plan. You can find retirement plan limits for next year in my article: Quick Tax Facts for 2006.
According to IRS spokesperson Jesse Weller,
"For 2005, annual deferrals under a 401(k) plan are limited to $14,000 under IRC section 402(g), and annual deferrals under a 457 plan are also limited to $14,000 under section 457(b). The amounts deferred under the 401(k) plan are identified with the letter "D" in box 12 on Form W-2. The amounts deferred under the 457 plan are identified with the letter "G" in box 12 on Form W-2.
"Since each plan has independent limits, it is possible to have total deferrals of $28,000 for 2005."
In fact, many large government employers offer their employees both 401k and 457 plans, which enables employees to supercharge their retirement savings. For additional information on saving and planning for retirement, check out About Retirement Planning.
- About 401(k) Retirement Plans
- About Section 457 Retirement Plans
- Overview of 403(b) and 457 Plans from the IRS
- Overview of 401(k) Plans from the IRS