Q: Currently I contribute the maximum to my 403b at work and get the match from my employer. What happens if I exceed the $23,000 allowed for my age (55)? Some of my friends have told me that I can’t go over but I say they are wrong. I also have about $1500 a month that I need to invest. Do I start an IRA? My joint income with my spouse is $200,000, my husband contributes the max as well to his plan.
A: Every plan that I have ever seen will cap you out as you hit the maximum $23,000. You will just see the amount that is typically withheld and deposited into your account, flow to your bottom line of your paycheck following the maximum contribution.
You will not be able to start another IRA because you already contribute to retirement plans (403B and 401K) and you are not eligible to contribute to a Roth IRA because of your income. One strategy could be contributing to a “non-deductible” IRA and converting that to a Roth every year. There is no income limit on the non-deductible IRA and you can contribute the $5,000 standard contribution and $1,000 catch up contribution for a total of $6,000 for each you and your husband. This should take care of the majority of the $1,500. After this, you will need to allocate to a taxable investment account.
Please let us know if we can ever be a further resource to you or your family.