Two Jobs, Two Retirement Plans; $110,000 Per Year Contribution Limit?

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SVT
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Two Jobs, Two Retirement Plans; $110,000 Per Year Contribution Limit?

Post by SVT » Mon Apr 16, 2018 6:49 am

I have 2 jobs. The FT job has a SEP-IRA. The PT job has a 401k. I'd like to confirm what the total legal yearly maximum contribution limit is with having both of these plans with separate employers.

Is the total legal contribution limit for employer and employee contributions $55k/year per plan? Or total between both plans? It seems to me that it's $55k/year per plan. I can theoretically have $55k/year contributed from my FT employer to the SEP-IRA and then make a $18.5k/year contribution into my PT employer's 401k plan, plus their match, up to another $55k/year, for a total of $110k/year. Is that correct?

This question is based on this article: https://www.financialsamurai.com/how-to ... solo-401k/

CFM300
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Re: Two Jobs, Two Retirement Plans; $110,000 Per Year Contribution Limit?

Post by CFM300 » Mon Apr 16, 2018 10:57 am

There are other contribution limits that would have be to be respected, such as:

1. Employer contribution to SEP IRA cannot exceed 25% of employee's compensation.

2. Aggregate (employer and employee) 401(k) contributions cannot exceed 100% of employee's compensation.

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BolderBoy
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Re: Two Jobs, Two Retirement Plans; $110,000 Per Year Contribution Limit?

Post by BolderBoy » Mon Apr 16, 2018 12:55 pm

SVT wrote:
Mon Apr 16, 2018 6:49 am
I can theoretically have $55k/year contributed from my FT employer to the SEP-IRA and then make a $18.5k/year contribution into my PT employer's 401k plan, plus their match, up to another $55k/year, for a total of $110k/year. Is that correct?
If your income is high enough at each employer, then theoretically yes, it is possible to do this. Practically, it is very unlikely to happen since the employer side may have other limitations in place over which you have no control. And if you do have such control, then you need to make sure that both these employers don't fall into a "control group" which would then limit the total contribution among all the plans combined.

Prior to retirement I had a FT employer wherein the 401k plan there was maxed out at about $35k/yr (at the time). Then I had a PT employer (me) with a 401k and maxed out the contributions there as well, year-after-year. Only my unwillingness to actually work 24/7/365 kept me from hitting 6 figure contributions between the two plans.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect

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Rager1
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Re: Two Jobs, Two Retirement Plans; $110,000 Per Year Contribution Limit?

Post by Rager1 » Mon Apr 16, 2018 1:04 pm

According to the IRS:
The amount of salary deferrals you can contribute to retirement plans is your individual limit each calendar year no matter how many plans you're in. This limit must be aggregated for these plan types:

401(k)
403(b)
SIMPLE plans (SIMPLE IRA and SIMPLE 401(k) plans)
SARSEP
If you’re in a 457(b) plan, you have a separate limit that includes both employee and employer contributions.

Make sure you don’t exceed your individual limit. If you do and the excess isn’t returned by April 15 of the next year, you could be subject to double taxation:

once in the year you deferred your salary, and
again when you receive a distribution.
Source: https://www.irs.gov/retirement-plans/ho ... ement-plan

Ed

SVT
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Re: Two Jobs, Two Retirement Plans; $110,000 Per Year Contribution Limit?

Post by SVT » Mon Apr 16, 2018 1:40 pm

Rager1 wrote:
Mon Apr 16, 2018 1:04 pm
According to the IRS:
The amount of salary deferrals you can contribute to retirement plans is your individual limit each calendar year no matter how many plans you're in. This limit must be aggregated for these plan types:

401(k)
403(b)
SIMPLE plans (SIMPLE IRA and SIMPLE 401(k) plans)
SARSEP
If you’re in a 457(b) plan, you have a separate limit that includes both employee and employer contributions.

Make sure you don’t exceed your individual limit. If you do and the excess isn’t returned by April 15 of the next year, you could be subject to double taxation:

once in the year you deferred your salary, and
again when you receive a distribution.
Source: https://www.irs.gov/retirement-plans/ho ... ement-plan

Ed

That appears to be referring to just the employee contributions, not the employee + employer contribution limit.

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