Can I invest in two 401ks the same year?

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anonyvestor
Posts: 163
Joined: Fri Aug 01, 2014 9:10 am

Can I invest in two 401ks the same year?

Post by anonyvestor » Sun Jan 03, 2016 5:16 pm

I anticipate changing employers midyear.

Can I continue to make monthly contributions to my current 401k until the date I switch employers, and thereafter continue to make monthly contributions (up to the annual limit) with my new employer's 401k for the rest of the year?

This would allow me to maximize my matching employer contributions.

Or must I choose one or the other?

Thanks for any insight in advance

Purelife304
Posts: 221
Joined: Sun Dec 14, 2014 12:17 pm

Re: Can I invest in two 401ks the same year?

Post by Purelife304 » Sun Jan 03, 2016 5:19 pm

You can make contributions up to the 18k limit. I did this 2 years ago, first half of the year with one employer, second half with the other. When I left the first employer that is when I rolled that 401k over to Vanguard IRA, and now have my current employers 401k.

:sharebeer

retiredjg
Posts: 32914
Joined: Thu Jan 10, 2008 12:56 pm

Re: Can I invest in two 401ks the same year?

Post by retiredjg » Sun Jan 03, 2016 5:20 pm

You can use one, the other, or both. But together, the total is $18k.

123
Posts: 3387
Joined: Fri Oct 12, 2012 3:55 pm

Re: Can I invest in two 401ks the same year?

Post by 123 » Sun Jan 03, 2016 5:20 pm

As long as your total 401K contributions from all employers do not exceed the 401K maximum for the year you're okay. You don't get any bonus tax-advantaged space simply by having more then one employer in a particular calendar year.
The closest helping hand is at the end of your own arm.

kksmom
Posts: 128
Joined: Sun Oct 09, 2011 11:07 am

Re: Can I invest in two 401ks the same year?

Post by kksmom » Sun Jan 03, 2016 5:23 pm

http://whitecoatinvestor.com/beating-th ... qa-series/
Q.

Is the $51K limit per person or per job?

A.

In 2013, the total of employee and employer contributions to retirement plans such as 401Ks, 403Bs, 457Bs, Solo 401Ks, SEP-IRAs, Profit-Sharing Plans, Keoghs etc is $51,000. (Add $5500 as a catch-up contribution for those over 50.) However, that limit is PER JOB, not per person.....
Courtesy Jim Dahle/WCI and Mike Piper/Oblivious investor.

2retire
Posts: 367
Joined: Wed Jun 13, 2012 9:00 am

Re: Can I invest in two 401ks the same year?

Post by 2retire » Sun Jan 03, 2016 5:39 pm

Here are a couple of things to keep in mind when switching employers.

The new employer might not allow you to get in their 401(k) on day one (some have 3-6 month exclusionary periods). This may mean that you need to up your contribution levels later in the year. This will make your pay checks smaller. You might not be comfortable living on those smaller paychecks for the rest of the year. Remember to save that extra cash during the exclusionary periods for living expenses during the smaller paychecks time.

Not all employers and plans handle job switching well. You may not be able to tell the new plan how much you have invested already this year. This means you have to keep track of how many new company pay periods are left in the year and make sure your new contribution level doesn't make you go over. You may also need to worry about a possible bonus that you didn't expect showing up at the end of the year and pushing you over the limit. If you do go over the limit, you'll just have to deal with the hassle of taking the money back out and amending information.

an_asker
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Joined: Thu Jun 27, 2013 2:15 pm

Re: Can I invest in two 401ks the same year?

Post by an_asker » Sun Jan 03, 2016 5:44 pm

kksmom wrote:http://whitecoatinvestor.com/beating-th ... qa-series/
Q.

Is the $51K limit per person or per job?

A.

In 2013, the total of employee and employer contributions to retirement plans such as 401Ks, 403Bs, 457Bs, Solo 401Ks, SEP-IRAs, Profit-Sharing Plans, Keoghs etc is $51,000. (Add $5500 as a catch-up contribution for those over 50.) However, that limit is PER JOB, not per person.....
Courtesy Jim Dahle/WCI and Mike Piper/Oblivious investor.
Unless I am badly mistaken, the limit you are looking at is for the total employee and employer contribution.

kksmom
Posts: 128
Joined: Sun Oct 09, 2011 11:07 am

Re: Can I invest in two 401ks the same year?

Post by kksmom » Sun Jan 03, 2016 6:02 pm

an_asker wrote:
kksmom wrote:http://whitecoatinvestor.com/beating-th ... qa-series/
Q.

Is the $51K limit per person or per job?

A.

In 2013, the total of employee and employer contributions to retirement plans such as 401Ks, 403Bs, 457Bs, Solo 401Ks, SEP-IRAs, Profit-Sharing Plans, Keoghs etc is $51,000. (Add $5500 as a catch-up contribution for those over 50.) However, that limit is PER JOB, not per person.....
Courtesy Jim Dahle/WCI and Mike Piper/Oblivious investor.
Unless I am badly mistaken, the limit you are looking at is for the total employee and employer contribution.

It was just to clarify that there can be situations when the total limit is greater than 51K.
Yes its employer+employee contributions.
As WCI notes there are sitns like where one has an solo 401k in addition to a regular job etc. Caveats in the article apply..

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JustinTime
Posts: 452
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Re: Can I invest in two 401ks the same year?

Post by JustinTime » Mon Jan 04, 2016 7:26 pm

The limit is 53K not 18K for employers 401Ks. 18K is the limit for deferred contributions through all 401Ks though although some 401K's allow after-tax contributions. For example say you maxed out your 18K pre-tax at the first job, but your second job allows after-tax contributions you could contribute up to 35K there assuming you aren't receiving any matches.

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