Can I contribute to a 457(b) governmental plan and solo 401k?

QUESTION:

Can I contribute to a 457(b) governmental plan and solo 401k at the same time?

ANSWER: 

The answer is yes. Unlike 40k plans where the employee contributions have to be aggregate among all plans, the same rule does not apply to a 457b.

For example, if you are currently participating in a 457b plan and you are also self-employed on the side with no full-time employees, you can also contribute to the solo 401k plan based on self-employment income; therefore, you can maximize the contributions to each plan.

The maximum salary deferral contribution (also known as employee contribution) that may be made to a 457b in 2016 is $18,000, which is the same for a solo 401k plan. Therefore, if you have the income from both your full-time job and your self -employed business sponsoring the solo 401k to support the contributions, the rules will allow you to contribute $53,000 to the solo 401k plan (made up of profit sharing and employee contributions) and an additional $18,000 to the 457b plan for tax year 2016.

Click on SOLO 401k FAQs to learn more.