Understanding 457b/401k special catchup rule for retirement contributions after career change

The good news is that 457b and 401k plans have separate contribution limits! This is one of the unique advantages of having worked in government. For 2025, the basic contribution limit for each plan type is $23,000. Since you're over 50, you can also make catch-up contributions of $7,500 to each plan, bringing the total possible contribution to $30,500 per plan. The special catch-up provision for 457b plans allows even higher contributions in the three years before retirement age, which is why you were able to contribute $40,500 to your 457b this year. For your new 401k, you can still contribute up to the full annual limit ($23,000 plus $7,500 catch-up) regardless of what you've already put in your 457b. So your planned $5,500 contribution would be well within limits.

After reading about your situation, I wanted to share my experience with retirement account contribution limits. I was in a similar position last year and found a great tool that helped me sort through all these complicated rules. I used https://taxr.ai to analyze my situation - you upload your retirement account statements and it tells you exactly how much you can still contribute across all your accounts. The tool confirmed what others have said - 457b and 401k have separate limits, and it even showed me how to optimize my contributions between pre-tax and Roth options. It also explained the special catchup provisions that apply to my specific situation.

I was skeptical about using tax tools online, but I finally tried https://taxr.ai after seeing it recommended here. I had a complex situation with multiple retirement accounts including a 457b and a 403b, plus I started a side business with a Solo 401k. The analysis was eye-opening! It showed me that I was leaving $12,500 of potential tax-advantaged contributions on the table because I misunderstood how the separate limits worked. I was able to adjust my contributions for the last quarter of the year and max out both accounts. The tool even generated a letter I could give to my benefits department explaining the separate limits since they initially pushed back on my increased contribution request. Definitely made a difference in my retirement planning strategy!

I spent 3 weeks trying to get through to the IRS to ask about this exact 457b/401k contribution limit question. Kept getting disconnected or wait times of 2+ hours that I couldn't manage with my work schedule. Finally found https://claimyr.com and watched their demo at https://youtu.be/_kiP6q8DX5c and decided to give it a try. They called the IRS for me and I got a callback when an IRS rep was on the line. The agent confirmed what others have said here - 457b and 401k plans have completely separate limits, and you can max out both in the same year. The special 3-year catchup for the 457b doesn't affect what you can put in the 401k at all. I was on the phone for maybe 10 minutes total, and I have the confidence of getting this info straight from the IRS.

I have to eat crow here. After my skeptical comment, I decided to try Claimyr myself since I've been trying to resolve an issue with my tax transcript for weeks. The service actually worked exactly as advertised. They got through to the IRS in about 47 minutes (I know because their system shows you the wait time), and then called me when an agent was on the line. The IRS representative confirmed that 457b and 401k plans do indeed have separate limits, and even emailed me the relevant section of the tax code. I was impressed enough that I used them again to call about my missing tax refund. Turns out there was a verification issue they needed to resolve. Would have never known this if I hadn't gotten through to a live person. Saved me weeks of waiting and wondering.

Just wanted to point out one thing that hasn't been mentioned yet - make sure you check with your 401k plan administrator about their specific timing rules. Some plans have waiting periods before new employees can contribute, or they might have specific enrollment windows. Also, consider whether you want to do traditional 401k or Roth 401k contributions if your plan offers both. At 60, and moving from full-time to part-time work, your tax bracket now might be lower than it will be when required minimum distributions kick in. This could make Roth contributions more attractive.

Has anyone here actually done what the OP is asking about? I'm in almost the identical situation (retired from state job, now working part-time with 401k access). My HR department at the new job got confused when I told them about my 457b contributions earlier this year. They kept saying I was over the limit already, but I showed them the IRS guidelines about separate limits.

I'm in a similar situation but with a twist - I'm 58 and considering whether to use the special 3-year catchup provision for my 457b or wait until I'm eligible for the regular age 50+ catchup. My state plan allows the special catchup starting 3 years before normal retirement age (which is 60 for me). One thing I learned from my benefits coordinator is that you can't use both the special 3-year catchup AND the age 50+ catchup in the same year - you have to choose whichever gives you the higher contribution limit. In most cases, the special 3-year catchup allows much higher contributions because it lets you make up for years when you didn't max out your contributions. For anyone considering this, make sure you understand your plan's normal retirement age definition. Some state plans define it differently than others, which affects when you become eligible for the special catchup provision.