If you have a 457 plan, you can make the most of it and still make a full contribution to a Roth IRA as long as you meet income standards. The amount of salary deferrals you can contribute to retirement plans is your individual limit each calendar year, regardless of the number of plans you have. The plan must distribute the excess contribution to you by April 15 of the following year (or on an earlier date specified in the plan). If the executive leaves the company before his time is up, he loses any right to the 457 (f) plan.
Employees who contribute to a 457 (b) can contribute to an IRA if their earned income is at least equal to the IRA contribution. If you qualify and the plan allows for both types of recovery, your contributions above the annual limit are considered to have been made first in a 15-year period. Most 457 (b) plans cover state and local government workers and public school employees, but some tax-exempt organizations, such as hospitals and unions, offer them to employees who receive high compensation due to some federal retirement plan regulations. At that point, the owner of a 457 plan can transfer their retirement savings plans to a deferred IRA with an additional lifetime income clause with no tax consequences.
If you have a 457 (b) plan, you have a separate limit that includes employee and employer contributions. It was named in honor of Delaware Senator William Roth, who coined the term “Roth IRA” to introduce legislation that conditionally authorized IRAs. Both a Roth IRA and a 457 plan will provide a direct death benefit that will be the value of the retirement plan account in a lump sum. Conjugal Roth IRAs are the same as regular Roth IRAs, but they should be kept separate from each other's accounts.
Younger investors can contribute to a new Roth IRA annuity or convert their traditional IRAs into a Roth IRA annuity and also guarantee their future tax-free income during retirement. The annuity will then spread tax-free income over the rest of the life of the retiree or married retirees, even after the Roth IRA runs out of money. Although the terms of a plan may impose lower limits on contributions, the total amount allowed by tax law does not depend on the number of plans it belongs to or who sponsors those plans. For many employees, the employer's plan is the 457 (b), one of several types that allow tax-deferred contributions to be deferred.