In a given year can I contribute to both (my employer's 403(b) and the IRA I set up myself?

Question

My employer has a 403(b) and I set up an IRA account in 2006. Can I contrbute money to both this year?

Do I need to max out the contributions to 403(b) before adding money into an IRA?

If I can only contribute to the 403(b), but I've already put money into the IRA this year, can I still write it off on my '07 taxes?

Thanks,
David

Answer 1

Max out your contributions to the 403-b plan first. Then you are allowed to contribute to IRA's in the amounts allowed by the tax laws for your income level.

It makes no difference if you have already contributed to the IRA. You can still contribute to the 403B plan. Deductibilty of this year's contributions again depands on your taxable income.

Answer 2

403(b) is like a 401(k) but for non-profit employees. So yes, you can contribute to both a 403(b) and an IRA in the same year. If the IRA is a Traditional IRA, you can write off the contributions you make this year on next years' taxes (unless you designated those contributions as being for 2006, then you can write them off this year, up to the IRS limits, which depend on your age). If it's a Roth IRA, the contributions are not tax-deductible, but (because they are after-tax dollars) they will not be taxed when you take them out at retirement.