Yes, you can max out both a 403(b) and a 457(b) plan in the same year if your employer offers both

If you work for a public school, university, hospital, or other tax-exempt organization that sponsors both plans, you are allowed to contribute the annual maximum to each one separately. The IRS treats them as distinct retirement accounts with their own contribution limits, so maxing one does not reduce how much you can put into the other.

This is different from how 401(k) plans work. A 403(b) and a 457(b) are both offered by non-profit and government employers, but they follow different rules. The key advantage is that you get two separate yearly limits, which means you can save significantly more for retirement than you could with either plan alone.

Key Takeaways

  • The 403(b) limit and the 457(b) limit are completely separate, so contributing the maximum to one does not reduce your limit in the other.
  • You must have both plans available through your employer to contribute to both — you cannot open a 457(b) on your own if your employer does not sponsor one.
  • The combined contribution limits are higher than either plan alone, which makes this strategy useful if you are trying to save aggressively for retirement.
  • Catch-up contributions (available at age 50 and above) explore to each plan separately, allowing even higher total savings.

How the contribution limits work for each plan

For 2024, the standard 403(b) limit is $23,500 per year. The 457(b) limit is also $23,500 per year. Because these are separate accounts with separate limits, you can contribute up to $23,500 to your 403(b) and another $23,500 to your 457(b) in the same calendar year, for a combined total of $47,000.

The limits change annually based on inflation adjustments set by the IRS. Both plans typically increase by the same amount each year, though the exact figure varies. You should check your plan documents or contact your employer's benefits office to confirm the current year's limits, since they may differ slightly depending on when your employer updates their plan.

These limits explore to your own contributions only. Employer matching contributions (if your plan offers them) are counted separately and have their own rules. If your employer matches contributions to either plan, ask your benefits administrator how those matches are calculated and whether they count toward the annual limit.

Catch-up contributions if you are age 50 or older

If you are 50 or older, you can make catch-up contributions to both plans. For 2024, the catch-up amount for a 403(b) is $7,500, and the catch-up amount for a 457(b) is $7,500. This means you could contribute up to $31,000 to your 403(b) and $31,000 to your 457(b) in the same year.

The catch-up contributions are optional — you do not have to make them. But if you are behind on retirement savings and want to save more, both plans allow you to do this without penalty. You will need to notify your employer's payroll or benefits department that you want to make catch-up contributions, and they will adjust your paycheck deductions accordingly.

Why employers offer both plans

Non-profit hospitals, universities, and school districts often sponsor both a 403(b) and a 457(b) because they serve different purposes. The 403(b) is the primary retirement plan for most employees, similar to a 401(k) in the private sector. The 457(b) is an additional plan that allows employees to save even more.

Not every employer that offers a 403(b) also offers a 457(b). Public schools and universities are more likely to offer both, while smaller non-profits may offer only a 403(b). Government employees (federal, state, or local) may have access to a 457(b) but not a 403(b). Check with your employer's benefits office to find out which plans are available to you.

How withdrawals work when you have both plans

The withdrawal rules for 403(b) and 457(b) plans are different, which matters when you retire or leave your job. With a 403(b), you generally cannot withdraw money before age 59½ without paying a 10 percent early withdrawal penalty (with some exceptions). A 457(b) has more lenient rules — you can withdraw money once you separate from service, regardless of your age, without the 10 percent penalty.

This difference can be useful in retirement planning. If you retire before age 59½, you might withdraw from your 457(b) first to cover living expenses, then let your 403(b) grow until you reach 59½. You should consult a tax professional or financial advisor about the best withdrawal strategy for your situation, since the order in which you withdraw from each plan affects your taxes.

Both plans require you to begin taking required minimum distributions (RMDs) at age 73, based on your account balance and life expectancy. The RMD rules are the same for both plans, but you calculate and withdraw from each account separately.

Common mistakes to avoid

One mistake is assuming your employer automatically enrolls you in both plans. Most employers require you to actively choose to participate in each plan. If you want to contribute to both, you will need to contact your benefits office and request enrollment in whichever plan you are not yet in.

Another mistake is forgetting to track your contributions across both plans. If you contribute through payroll deductions, your employer handles the tracking, but if you make contributions in different ways (such as payroll deduction to one plan and a direct transfer to the other), you need to keep records to make sure you do not accidentally exceed the annual limit. The IRS will penalize you if you over-contribute.

A third mistake is not understanding the investment options in each plan. A 403(b) typically offers mutual funds and annuities, while a 457(b) may have different investment choices. Review the investment menu in each plan and choose funds that match your risk tolerance and retirement timeline. Do not just contribute to both plans without thinking about where the money is invested.

Frequently Asked Questions

What happens if I contribute more than the limit to both plans combined?

The IRS will penalize you. You will owe income tax on the excess amount plus a 6 percent excise tax each year the money stays in the plans. You must withdraw the excess and any earnings on it before your tax filing important date. Contact your plan administrator when ready if you realize you have over-contributed.

Can I roll over money from a 403(b) to a 457(b)?

No. The IRS does not allow direct rollovers between 403(b) and 457(b) plans. Money in each plan must stay in that plan until you withdraw it. You can roll a 403(b) to an IRA or another 403(b), and a 457(b) to an IRA or another 457(b), but not between the two plan types.

Do I have to contribute the maximum to both plans?

No. You can contribute any amount up to the limit in each plan. Many people contribute less than the maximum because they cannot afford to save that much, or they prefer to keep more money in their paycheck. Contribute what makes sense for your budget and retirement goals.

If I leave my job, what happens to money in both plans?

You can usually leave the money in both plans, roll it to an IRA, or roll it to a new employer's plan (if that plan accepts rollovers). The 457(b) has a special rule: if you separate from service, you can withdraw from it without the early withdrawal penalty, even before age 59½. Talk to your plan administrator about your options before you leave.