Can anyone tell me definitively what the differences are between these retirement accounts:401k401a403b?Also, can a 403b be rolled over into an IRA (either traditional or Roth) without leaving the employer?Thanks in advance!
Oops - almost forgot - one more question.Has anyone heard of a 401a where the employer contributes money, but does not allow the employee to contribute? This is how DW says it was explained to her, but it sounds dubious to me and I thought I should check.Again, thanks!
Greetings, Them, and welcome. You asked:Can anyone tell me definitively what the differences are between these retirement accounts:401k401a403b?A 401a plan can be a defined benefit or a defined contribution plan. The "401a" simply denotes the section of the tax code that allows an employer to make a qualified, tax-deferred contribution on the employee's behalf to a retirement plan. There are all kinds of plans or combinations of plans that fall under the 401a umbrella. Besides the typical pension plan, these include 401k, profit sharing, and money purchase plans. Thus, there's no single source of reading I can point you to without knowing the specifics of a particular plan. However, for an overview of the most common types of plans (to include 401(k) and 403(b) plans, see the Foolish Retirement Plan Primer at http://www.fool.com/Retirement/Retirement.htm. While the contributions limits may be somewhat out of date since it was first put online, it will still give you a working knowledge of what the various plans allow.Also, can a 403b be rolled over into an IRA (either traditional or Roth) without leaving the employer?Generally, no. The person employed in a job that offers a 403(b) plan must usually leave that job before funds in the plan may be transferred to an IRA. For the specifics of the plan concerned, the employee should contact the plan administrator.Regards...Pixy
As a follow on, Them asks:Has anyone heard of a 401a where the employer contributes money, but does not allow the employee to contribute?That's not unusual. As I said before, a 401a plan comes in many different forms. Thus, one in which the employer only contributes is not all that uncommon.Regards...Pixy
It seems the 401a is more different than I expected!Thanks very much!
Here goes: Internal Revenue Code Section 401(a) defines (in all of its subparts) what constitutes a "qualified" retirement plan (a plan sponsored by an employer for the benefit of its employees that has certain tax advantages). ALL qualified retirement plans are, in fact, 401(a) plans. All of the other plans people talk about are specialized retirement plans defined in the subparts of 401(a). So, for example, a 401(k) plan is a 401(a) plan that contains provisions for employee salary deferrals, and the tax benefits contained in it. Code Section 401(k) is a section that defines a certain type of permissable contributions allowed in a plan qualified under 401(a). 403(b) is a section that incorporates many of the provisions (some modified) into a scheme that functions to provide retirement benefits to employees of not-for-profit organizations. It was at one time thought that not-for-profits couldn't (or shouldn't) pay as much in wages and provided some more liberal provisions for retirement plans sponsored by them. most of the differences have been eliminated (albeit some remain) and 403(b)'s tend to look more like 401(k) plans.A 401(a) plan that provides only for employer contributions would simply be a qualified retirement plan that hasn't implemented the optional provisions of 401(k) relating to salary deferral contributions. Such is the case with pure profit sharing plans (a 401(k) is really a profit sharing plan with a 401(k) feature), a "money purchase pension plan (where an employer promises to contribute a determined amount each year (without regard to profits - or even cash flow), or a "traditional" pension plan that pays a monthly benefit pursuant to a formula (usually based on years of service and final average compensation - such as 2% times years of service time the average of monthly pay over the last five years of employment).
Here goes: <comprehensive information on 401(a)'s>-----Many thanks!
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