403(b) contribution limits?

[zinjanthropus]

$15,500 is the IRS limit, right? Are there any income limits or limits on how much is tax-sheltered? Can an employer limit your contributions to a number < $15K?

Finally - is it up to the employer or to the IRS whether or not you can catch up later to years where you didn't max out your plan?

Thanks.

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[southerndoc]

Your employer cannot limit your contributions smaller than the IRS limit.

The IRS is the only one that can say you are eligible for catch up contributions, which are effective after reaching 50 years of age.

The IRS and ERISA both have special regulations concerning high income employees, which limits preferential treatment to those earning high incomes. In those cases, employer match may be significantly less than with regular employees. As a resident, this shouldn't be a problem for you now, but could pop up when you become an attending.

In addition to your employer-sponsored retirement account, you will be eligible to contribute the maximum amount to a Roth IRA so long as your income isn't too high.

One thing to keep in mind is that 401(k)'s and 403(b)'s are protected from bankruptcy and lawsuits. IRA protection varies by state, with most states offering no protection. Food for thought when you finish residency and go to transfer your retirement accounts into a Rollover, Roth conversion, etc.

 

[The White Coat Investor]

$15,500 is the IRS limit, right? Are there any income limits or limits on how much is tax-sheltered? Can an employer limit your contributions to a number < $15K?

Finally - is it up to the employer or to the IRS whether or not you can catch up later to years where you didn't max out your plan?

Thanks.

Like with the Roth IRA, you cannot "catch-up" later. Otherwise hardly anyone would have a taxable investing account. We'd just make "catch-up" contributions for the first two decades of our life. "But I just couldn't come up with $15K while I was sucking on my pacifier" doesn't fly with the IRS.

 

[zinjanthropus]

thanks for the helpful replies

 

[Bobblehead]

One thing to keep in mind is that 401(k)'s and 403(b)'s are protected from bankruptcy and lawsuits. IRA protection varies by state, with most states offering no protection. Food for thought when you finish residency and go to transfer your retirement accounts into a Rollover, Roth conversion, etc.

ERISA protection has been expanded to some IRAs:

http://www.tiaa-cref.org/support/le...nt/topics/family-matters/bankruptcy_iras.html

 

[southerndoc]

ERISA protection has been expanded to some IRAs:

http://www.tiaa-cref.org/support/le...nt/topics/family-matters/bankruptcy_iras.html

No protection from lawsuits though, which is the primary thing physicians need to be concerned with. Laws vary by state.

"BAPCA only applies to bankruptcies. These protections do not shield an investor's IRA assets from other types of judgments, such as civil lawsuits. Qualified retirement plans, however, because of ERISA, are protected from both bankruptcies and other types of judgments."

Also, even during bankruptcy, IRA's are limited to $1 mil indexed for inflation, whereas 403(b)'s and 401(k)'s are limitless.