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Author: Supanich Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75384  
Subject: Contributions to both a 401(k) and IRA Date: 12/22/2001 12:26 PM
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I need some clarification:

My employer will start a 401(k) in Jan 02. He will match 100% up to the first 3% that I defer. I plan on contributing the max that I can.


Can you contribute to a 401(k) and an IRA in the same year?

If I don't hit the $11,000 contribution ceiling for the 401(k), can I make up the difference by contributing to an IRA (not to exceed the $2500 limiit of course).

Thanx for your help


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Author: rkmacdonald Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 32873 of 75384
Subject: Re: Contributions to both a 401(k) and IRA Date: 12/22/2001 12:43 PM
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Author: Supanich Date: 12/22/01 12:26 PM Number: 32871
My employer will start a 401(k) in Jan 02. He will match 100% up to the first 3% that I defer. I plan on contributing the max that I can.

Can you contribute to a 401(k) and an IRA in the same year?


Yes. The 401(k) and IRA rules are completely separate and do not influence each other. You can contribute the max to your IRA, your 401(k), or both each year.

RK

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Author: Mark0Young Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 32878 of 75384
Subject: Re: Contributions to both a 401(k) and IRA Date: 12/22/2001 2:52 PM
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If I don't hit the $11,000 contribution ceiling for the 401(k), can I make up the difference by contributing to an IRA (not to exceed the $2500 limiit of course).

Next year's limit on Traditional IRA + Roth IRA contributions is $3,000 ($3,500 if you turn 50 in 2002 or you are already 50 or older).

Yes, you can contribute to both. However, the phase-out on the deductability of a Traditional IRA contribution is at a much lower amount if you contribute at all to a 401(k) or similar plan, so many of us end up not being able to deduct any contributions to a Traditional IRA so the next choice would be a Roth IRA (higher income limits before phase-out) and, yes, one would be able to contribute both $11,000 to a 401(k) (if one meets the plan provisions) and $3,000 (or $3,500) to a Roth IRA (if one's modified Adjusted Gross Income doesn't hit the phase-out amount). And that is exactly what I plan to do, too! 8)

See "All About IRAs" (http://www.fool.com/money/allaboutiras/allaboutiras.htm) for more information.



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Author: jrr7 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 32913 of 75384
Subject: Re: Contributions to both a 401(k) and IRA Date: 12/26/2001 1:39 PM
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Do note, though, that the 401(k) rules are the same section as SEP-IRAs (at least for the employer contribution). If you max out a 401(k) working for someone else, you can't max out your SEP-IRA working for yourself.

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 32914 of 75384
Subject: Re: Contributions to both a 401(k) and IRA Date: 12/26/2001 1:54 PM
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Jrr7 writes:

Do note, though, that the 401(k) rules are the same section as SEP-IRAs (at least for the employer contribution). If you max out a 401(k) working for someone else, you can't max out your SEP-IRA working for yourself.

Sorry, that's not true. They are completely separate entities. As long as the $35K dollar limit for both plans combined is not exceeded, a self-employed person may max out the SEP-IRA based on net self-employed income. That person may also max out a 401(k) plan while working as the employee of someone else based on the compensation earned in that job.

Regards..Pixy

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Author: marcusfan One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 32915 of 75384
Subject: Re: Contributions to both a 401(k) and IRA Date: 12/26/2001 2:07 PM
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Pixy: As long as the $35K dollar limit for both plans combined is not
exceeded, a self-employed person may max out the SEP-IRA based on net self-employed income. That person may also
max out a 401(k) plan while working as the employee of someone else based on the compensation earned in that job.


Pixy does this apply to 457 plans also? I know that they are not quite the same, but after the changes go into effect next year I think they are very similar. So can I max out my 457 and also max out the SEP based on my self employment income? Thanks.

Marcusfan





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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 32918 of 75384
Subject: Re: Contributions to both a 401(k) and IRA Date: 12/26/2001 2:50 PM
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Marcusfan asks:

So can I max out my 457 and also max out the SEP based on my self employment income?

Yes, you can max out both.

Regards..Pixy

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