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William Perez

Can I Contribute to Both a 401(k) and a 457 Plan?

By April 12, 2006

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Today's tax question comes from D. Duncan. He asks:

"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.

Additional Resources:

Throughout the tax season I will be answering one tax question per day. Do you have a question? Visit the Ask a Tax Question page. Disagree with my answers? Post your comments in the Tax Forum.

Comments
April 22, 2006 at 1:59 pm
(1) Dean Duncan says:

Great help. Thank you for taking the time to research this. Dean.

April 14, 2012 at 10:45 pm
(2) Jim Burford says:

Can I contribute to my 401k up to 17000 (2012) and can my wife contribute up to 17000 in her government 457 plan giving us a total retirement annual savings per family of 34000?

Can I add money into my 401 k this late in the tax season and apply the saving to reduce my 2011 taxes if if havent exceeded the 2011 16,500 maximum contribution to my 401k employer plan?

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