Employees that are eligible to participate in both 401K and 457 plans

[Guest greg9876]

I am eligible and do participate in both my company's 401K and 457 plans as I work for a government agency. Originally we only were eligible to participate in a 457 plan and recently we were given the option to also participate in a 401k plan also and I have participated in both plans. We are probably in a rather unique if not strange situation vis a vis the tax authorities as most people have one or the other but not both plans. My question is whether or not this participation is subject to the excess deferrals rule of the IRS. How is this treated? Any clues? Any websites I can look at? Any useful advise would be appreciated.

[wmyer]

After EGTRRA went into effect, 457 and 401(k) deferrals are no longer coordinated. Therefore, if you are under age 50, you can defer $14,000 into each plan for 2005, for a total of $28,000. If you are age 50 or over, you can make an additional catch-up contribution.

[Guest greg9876]

Vmyer wrote "After EGTRRA went into effect, 457 and 401(k) deferrals are no longer coordinated." Would you kindly explain what coordinated means in this context and does it matter if you have only one job? Also, could you give me a reference or web site where I can look up the text of how this provision is actually written. Any help would be appreciated. Thanks again. Greg

[QDROphile]

Start with publication 4406, available on line at the IRS website, and then use the resources mentioned in the publication. Unfortunately, the publication itself does not explain that an individual's deferrals under 403(b) and 401(k) plans are aggregated for purposes of the deferral limit, but that deferrals under 457(b) plans are not aggregated with deferrals under 401(k) or 403(b) plans. That is what is meant by "no longer coordinated."