{"id":110681,"date":"2024-10-20T00:46:31","date_gmt":"2024-10-20T00:46:31","guid":{"rendered":"https:\/\/namso-gen.co\/blog\/are-401k-and-457-combined-contribution-limits\/"},"modified":"2024-10-20T00:46:31","modified_gmt":"2024-10-20T00:46:31","slug":"are-401k-and-457-combined-contribution-limits","status":"publish","type":"post","link":"https:\/\/namso-gen.co\/blog\/are-401k-and-457-combined-contribution-limits\/","title":{"rendered":"Are 401k and 457 combined contribution limits?"},"content":{"rendered":"

Are 401k and 457 Combined Contribution Limits?<\/p>\n

When it comes to retirement savings, two popular options that individuals often consider are the 401k and the 457 plans. Both of these plans offer tax advantages and are designed to help individuals save for their retirement years. However, many people wonder whether the contribution limits for these plans can be combined. In this article, we will explore whether the 401k and 457 plans have combined contribution limits and provide answers to several related FAQs.<\/p>\n

The 401k Plan:
\nA 401k plan is an employer-sponsored retirement savings plan that allows employees to contribute a portion of their pre-tax income to a designated account. The contributions and any earnings grow tax-deferred until withdrawal, typically during retirement. The funds can be invested in a selection of investment options, such as mutual funds or stocks, depending on the employer’s offerings.<\/p>\n

The 457 Plan:
\nSimilar to a 401k plan, a 457 plan is also an employer-sponsored retirement savings plan. However, it is designed specifically for public sector employees, such as those employed by state or local governments or certain nonprofit organizations. It offers similar tax advantages to a 401k plan, including tax-deferred growth and the ability to contribute pre-tax income. Like the 401k, the funds can be invested in various investment options.<\/p>\n

Combined Contribution Limits:
\nWhile the 401k and 457 plans have many similarities, their contribution limits are not combined. Each plan has separate and distinct contribution limits set by the Internal Revenue Service (IRS). As of 2021, the annual contribution limit for a 401k plan is $19,500 for individuals under the age of 50, with an additional catch-up contribution of $6,500 for those aged 50 and above. On the other hand, the 457 plan also has a separate limit of $19,500, but it allows participants aged 50 and above an additional catch-up contribution of $6,500, similar to the 401k plan.<\/p>\n

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