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Hi,

Is there a limit to the amount one can contribute to retirement accounts? I spoke to someone today, and he said that since I have an employer sponsored 401k, and a 403b, I can't have a traditional IRA (at least I can't enjoy the tax benefits). I am not sure if that's correct, but where can I find it out? Now, I am aware of the limits on individual accounts (13k for 401k, 12k for 403b for this year), but is there an overall limit, or a limit to the number of tax deffered accounts one can have?
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The 12k limit applies to 401k and 403b. You only get one limit on pre tax salary deferral. This is called the 402g limit. You cannot contribute 12k to a 401k and then do another 12k to a 403b. You may only contribute a combined total of 12k. If you are turning 50 or are already over 50 you may contribute an additional 2k as a catch up contribution.

Bill
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Is there a limit to the amount one can contribute to retirement accounts? I spoke to someone today, and he said that since I have an employer sponsored 401k, and a 403b, I can't have a traditional IRA (at least I can't enjoy the tax benefits). I am not sure if that's correct, but where can I find it out? Now, I am aware of the limits on individual accounts (13k for 401k, 12k for 403b for this year), but is there an overall limit, or a limit to the number of tax deffered accounts one can have?

Given that you are enrolled in a company retirement plan, the ability to deduct your Traditional IRA contributions is restricted. It will depend on your filing status and your income.

For a complete breakdown of how you may qualify, see Page 15 of the IRS Publication 590.

If you are filing single or head of household, your AGI must be less than $34k for a full IRA deduction. AGI between $34k and $44k allows for a partial deduction and anything over $44k does not allow the contributions to be deducted.

If you are married filing jointly, the AGI ranges are less than $54k for a full deduction, $54k to $64k for a partial deduction and anything over $64k is no deduction.

If you are married filing separately, it is pretty safe to assume you will have no deduction as the limit is AGI of $10k.

Hope that helps with regard to the ability to deduct your Traditional IRA contributions.

dt

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Being Foolish, I am thoroughly confused.

Firstly, my 401k account advisor didn't mention anything about not being able to tax-shelter 403b deductions, along with 401k. All calculations we did last week said that I will be able to save taxes on 403b also. Is there anything that I should bring to his attention?

I saw the AGI limits for IRA accounts on pg 15 of Pub 590, but there's no mention of 403b there. I looked at pub 571, but there are so many new terms (MAC, limits on elective deferrals, etc), that my head is spinninnnggggg.

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Tax rules regarding 403b accounts are generally the same as those for 401k accounts. Contribution limits are the same for both types of accouts. Your contributions to a 403b account are 'pre-tax,' that is, they reduce your taxable income; perhaps this is what your 401k account advisor meant regarding the remark on 'saving taxes on 403b.'

Even if you exceed the income limits for deductible IRAs, you can still make the annual maximum contribution amount to a 403b account, AND make non-deductible contributions to an IRA, AND make non-deductible contributions to a spousal IRA.

There are income limits beyond which you can't make contributions to Roth IRAs; for married couples, I think (?) it's 150K.

Regards,
Frank
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