dual 403b & 457 contributions

[Guest Sahara]

The new federal tax law allows dual contributions to 457 & 403b plans and my employer has both plans. The old law used to cap contributions at

25% of salary, up the the maximum allowable contribution. It appears that the new law allows

100% contribution of salary up to $11,000, plus catch-up. Under the new law, does it follow that in order to contribute $22,000 ($11,000 to each),

one would only need to earn $22,000 in income?

Would appreciate knowing if this is the case.

Sahara

[QDROphile]

As a practical matter it won't work that tightly. The elected deferrals are still included as FICA wages and FICA withholding is required. Then you may have other tax withholding, such as state and local taxes, unemployement and workers compensation. Also, if you have a cafeteria plan, you need to cover the amounts necessary for the plan contributions. $22,000 of gross income won't get you $22,000 of contributions. Smart employers won't even let you have this delusion. They will limit deferrals to something like 50%, or maybe a bit more.

You could get to $22,000 (or pretty close) of contributions with $22,000 of gross income if the employer funded the contributions rather than having the plan contributions come solely from deferrals. What are the chances?

[Guest STLGiant]

QDRO...what if you work for a public school district and aren't subject to FICA-OASDI, or possibly OASDI and HI (for select states, if hired prior to 1986)? Your federal taxable income is based on income net of pre-tax deferrals, so if you didn't have a 125 deferral, and deferred $22,000, you would have $0 taxable income, would you not?

[QDROphile]

If you assume away all possibility of definitions of income that are not identical to the plan's definition for the applicable purposes, maybe. I don't go that close to the edge. Monsters live in the abyss.

[Guest Yanikoski]

Don't forget that mandatory contributions to state retirement systems are not includible compensation, so that for virtually all public school employees the includible comp is less than 100% of gross comp.