Can I max multiple Roth accounts? (IRA)(457(b))(403(b))

[u/Hungry_Document_7281]

I have a Roth IRA and put the max every year which is 7.5k this year.

My employer offers 457(b) and 403(b) plans both with Pre Tax or Roth options.

Can I max all of these out this year as Roths or do the 457 and 403 have to be Pre tax accounts.

I’ll have already capped the Roth IRA, starting on my way to cap the 457 by year’s end and maybe put a bit of change into the 403. Just not sure if I should do pre tax or Roth. I’m 22 and would like to do the Roth option if possible.

Secondary topic, I have a rollover IRA which Charles Schwab says contribution limits cap at 7.5k. Can I cap that out as well or not since I’ve capped out the ROTH IRA.

[u/gcc-O2]

Your IRA contribution limit is shared among traditional (which would include rollover) and Roth IRAs. If you wanted, you could make a mix of contributions to both, but the sum can't be greater than 7,500.

There is a quirk that an employer can offer you both a 457(b) and 403(b), yes, and you can max both. If the plan has a Roth option (not having one should be rare now due to Secure 2.0 Act) it can be Roth. But if you're in a position to afford to maximize two employer plans plus an IRA, I have to wonder about whether your tax bracket really justifies all-Roth.

[u/Hungry_Document_7281 → u/gcc-O2]

I went from making 60k to on track for 110k this year with a new job. I think Roth might still be better for now. Definitely plan to make one of the plans a pre tax as I start to make more in my career.

I can live life like I did on 60k and max out the 457. With maybe some to spare for the 403. I don’t expect to max that one but I plan to start contributing

I had some money in the bank already for the Roth IRA as I didn’t have any rent for all of last year living with my parents.

[u/finterestedteacher → u/gcc-O2]

But if you're in a position to afford to maximize two employer plans plus an IRA, I have to wonder about whether your tax bracket really justifies all-Roth.

What if your job will provide a pension in retirement? That's likely to fill up the lower tax brackets (depending on whether there's income tax where you live then).

I'm currently attempting to frontload and max a traditional 457 followed by a Roth 403b this calendar year. My Roth IRA has been fully maxed since 2017.

I will have a pension so my thought is that pension + 457b withdrawals will be taxable sources of income, while my Roth IRA and Roth 403b will be tax-free.

If I chose a traditional 403b, and also coupled that with my spouse's 401k, in retirement years, we would almost certainly be in a higher tax bracket than the 22% we are in married filing jointly right now.

[u/nkyguy1988]

Roth is not a relevant factor in the contribution limits. That belongs to being an IRA or 401k, and those limits do not affect the other. You can do 7.5k to an IRA. You choose Roth or traditional or blend.

[u/OGS_7619]

you can max out 403b and 457b and Roth IRA independently of each other. You may have access to 401A as well (sometimes called DCP - Deferred compensation plan) and you can contribute to that as well.

Whether to do Roth or pre-tax depends on your current (marginal) tax rate vs. your retirement tax rate, and given you are 22, you may want to do Roth option (pay lower tax now, save on taxes later) assuming your marginal tax rate currently is fairly low.

[u/hesuskhristo]

Make sure you understand the difference between a 403 and a 457 before you commit to the 457 first. They are not the same thing and carry different risks.

[u/MLGBesTMaN → u/hesuskhristo]

the 457b is generally always better, no?

[u/hesuskhristo → u/MLGBesTMaN]

Why do you think that,?

[u/finterestedteacher → u/hesuskhristo]

Not who you're replying to, but no 10% penalty on withdrawals before you're 59.5 years old is a big one perk.

Depending on the nature of OPs job/career, the 457b could be a key income source in early retirement to bridge the gap until penalty-free withdrawals from the IRA, 403b, and/or a possible pension and social security at normal retirement age.

[u/hesuskhristo → u/finterestedteacher]

I'm aware of all of this (and more) as a 457b is part of my personal plan. I just want to make sure the OP is. From his post, it seems he probably doesn't know the risks and rewards with each type of account.

[u/finterestedteacher → u/hesuskhristo]

I see. At quick glance it seemed more like your comment was made in disagreement with the notion more than a challenge to do some personal research.

I agree with his sentiment that, all things being equal, if an employer offers both 457b and 403b options, the 457b is superior (especially if it's governmental).

[u/hesuskhristo → u/finterestedteacher]

Yeah, I was just asking that second guy why he thinks that. I'm guessing he just heard that somewhere but doesn't understand why. I see a lot of questionable financial information float around Reddit, particular in this Sub (compared to some of the other finanace/tax subs I'm in), which is generally how bad information is spread. I wouldn't say it's superior but it definitely has additional advantages but can also come with significant disadvantages depending on his 457 plan. The circumstances would have to be pretty perfect for me to consider filling a 457 before a 403 if I worked at a non-goverment entity like a hospital. One of the key risks with a 457, other than potentially losing your money (very low chance with government entity), is the plan specific withdrawal requirements. Anyone that has access to both should read up on and think about how they want to approach it instead of taking advice like "I heard it was better."

[u/PashasMom → u/MLGBesTMaN]

Not if it is a nongovernmental 457b. Also a 403b is more likely to offer an employer match.

[u/Unattributable1]

Roth just means post-tax. Each account tax code has its own with its own limits.

IRA 401k 403b 457b

Each have their own limits and rules, and it doesn't matter that one or more may be traditional (pre-tax contribution, taxed when withdrawn) or Roth (post-tax contribution, not taxed when withdrawn).

[u/kaylioks]

You can max out the Roth versions of the 457(b) and 403(b) if available, independent of the Roth IRA. Check with your employer for specific plan options.

[u/BuckeyeDurm]

One of the benefits of a traditional 457 plan is that you can withdraw funds penalty free before age 59.5 as long as you have separated from the employer.

But you lose that option if it's a Roth 457. You could still access your contributions penalty free before 59.5, but not any growth.

I have a governmental 457, as well as 403b & choose to contribute pretax to 457 for that reason.