How Much Can I Contribute To A Traditional Ira

How Much Can I Contribute To A Traditional Ira – I work for the federal government (which offers a savings plan) and a university hospital (which offers 403(b) and 457 plans). How much can I contribute to these pension schemes each year?

First, let’s look at the different types of retirement accounts available, then the contribution limits.

How Much Can I Contribute To A Traditional Ira

How Much Can I Contribute To A Traditional Ira

There are different types of employer sponsored retirement plans depending on the industry in which you work. Employee 401(k)s are offered by private companies. The employee contribution limit is $18,000 and the total contribution limit (employee and employer) is $53,000. If you are 50 or older, you can contribute an additional $6,000 as a “catch-up” contribution. , which means that as you approach retirement age, the contribution limit will be $24,000.

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403(b) accounts are offered by public schools and nonprofits, with maximum contributions the same as 401(k)s: $18,000 in employee contributions and $53,000 total, with catch-up provisions for employees age 50 and older.

A SIMPLE IRA or SEP is for people who are self-employed or small business owners. The same contribution limits apply here, but if you’re eligible to contribute to a SEP, we’ll discuss that in our article “Can I contribute to a SEP and a 401(k)?” The contributions are discussed in more detail in ?

The Thrift Savings Plan (TSP) is available to US government employees and military service members. It also has an employee contribution limit of $18,000 and a total contribution limit of $53,000.

457(b) plans are also known as deferred compensation plans, meaning you can save up to $18,000 each year after retirement. These plans are sometimes offered to government or municipal employees, public hospital employees, and tax-exempt organizations.

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Finally, you can also own and contribute to a traditional or individual Roth IRA outside of your employment. The limit for this contribution in 2016 is $5,500, with an additional contribution of an additional $1,000 if you are aged 50 or over.

Now that we’ve covered account types and limits, how do you connect them? Unfortunately, despite the fact that you are eligible to contribute to the TSP and 403(b), the combined limits of $18,000 on your behalf and $53,000 apply to both accounts (if you are 50 or older, the “hold up” limit is $62,000 due to order). This $53,000 limit applies to most employer-sponsored retirement plans: 401(k)s, 403(b)s, TSPs, solo 401(k)s, SIMPLE IRAs, SEP IRAs.

457 plans are deferred compensation, so they are treated differently and have their own limit of $18,000 that you can contribute. This limitation is not affected by the TSP/401(k)/403(b) limitation.

How Much Can I Contribute To A Traditional Ira

If you have a traditional IRA or a Roth IRA outside of your employer, you can save $5,500 regardless of how much you contribute to an employer-sponsored retirement plan. This border is completely different. You must have earned income to withdraw to an IRA, but it is not subject to any other retirement plan restrictions.

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If you contribute up to $18,000 to the 403(b) and your employer contributes up to the limit ($35,000 extra) to the 403(b), put the extra $18,000 into the 457(b) plan and save $5,500 in the Roth IRA . , you can save a total of $76,500.

For details on choosing your employer’s retirement plan, talk to Human Resources and check the IRS website for contribution limits for the past year. Ultimately, it’s your responsibility to make sure you’re following the contribution limits, so it’s always a good idea to do a bit of research to get the most up-to-date information.

At Marotta Wealth Management, we have no secret ingredient. Instead, we publish our strategies publicly and publicly as articles on our website.

Austin Fay is a wealth manager at Marotta Wealth Management, specializing in philanthropy and endowment. He is a regular contributor to our Marotta On Money articles, often offering advice to those just starting out in finance.

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