Can You Have Both a 457 Retirement Plan and an IRA?

Workers once counted on an employer pension to take care of them in retirement, but that's no longer the case. Traditional pensions have largely been replaced by workplace retirement accounts and retirees may need more than those to live comfortably. For many employees the employer plan is a 457(b), one of several types which allow contributions to be tax-deferred.

457 Contribution Limits

Most 457(b) plans cover state and local government workers and public school employees, but a few tax-exempt organizations, such as hospitals and labor unions, offer them to highly-compensated employees because of some federal rules on retirement plans. Eligible employees can defer pay, up to $17,500 a year in 2013 to contribute to a 457 plan. They may also contribute to an individual retirement arrangement.

Add an IRA

Employees who contribute to a 457(b) can contribute to an IRA if his earned income is at least equal to the IRA contribution. For 2013, IRA contributions are limited to $5,000 for either a traditional or a Roth type. Participating in a 457 plan, however, may limit IRA deductions or contributions in some cases.

Income Restrictions

For married couples filing joint returns, a spouse covered by a 457 gets a full IRA deduction only with joint income below $95,000. That goes up to $178,000 if the IRA contributor is not covered by a 457 but is married to a spouse who is. Roth IRA contributions are allowed with joint income up to $178,000. The 457(b) contributions are not affected by these limits.

Catch-up Contributions

Both 457(b) and IRA plans allow catch-up contributions for taxpayers aged 50 and over. That's an extra $5,500 for a 457 and $1,000 for an IRA. If an employer matches contributions to a 457(b) but sets a limit on those, a taxpayer can contribute up to the matching limit, switch to funding into an IRA until its maximum is reached, then return to 457 contributions to that limit.

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About the Author

Bob Haring has been a news writer and editor for more than 50 years, mostly with the Associated Press and then as executive editor of the Tulsa, Okla. "World." Since retiring he has written freelance stories and a weekly computer security column. Haring holds a Bachelor of Journalism from the University of Missouri.

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