401k/403b Contributions

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Topic Author
boglelover77
Posts: 3
Joined: Sun Mar 19, 2023 8:20 am

401k/403b Contributions

Post by boglelover77 »

I want to max out my employer contributions to my solo 401k for 2022 but am unsure about the max contribution limits. I have a 403b (employer 1), 401k (employer 2) and solo 401k (1099 income).

Does the 401(k) Employee & Employer Contributions limit of $61,000 apply to all of these cumulatively or does each get a $61,000 limit since they are "unrelated employers"?

Can I contribute any more employer contributions to my solo 401k for 2022?

1099 Income: $182,932
Expenses: $8,009
Net 1099 income:$174,923

1. Employer 1 403b
- Employee contributions: $15,720
- Employer contributions: $9,040
2. Employer 2 401k
- Employee contributions: $5,124
3. Solo 401k
- Employer contributions: $38,279.00

Thanks for your help!
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ruralavalon
Posts: 26297
Joined: Sat Feb 02, 2008 9:29 am
Location: Illinois

Re: 401k/403b Contributions

Post by ruralavalon »

boglelover77 wrote: Sun Mar 19, 2023 8:58 am I want to max out my employer contributions to my solo 401k for 2022 but am unsure about the max contribution limits. I have a 403b (employer 1), 401k (employer 2) and solo 401k (1099 income).

Does the 401(k) Employee & Employer Contributions limit of $61,000 apply to all of these cumulatively or does each get a $61,000 limit since they are "unrelated employers"?


Can I contribute any more employer contributions to my solo 401k for 2022?

1099 Income: $182,932
Expenses: $8,009
Net 1099 income:$174,923

1. Employer 1 403b
- Employee contributions: $15,720
- Employer contributions: $9,040
2. Employer 2 401k
- Employee contributions: $5,124
3. Solo 401k
- Employer contributions: $38,279.00

Thanks for your help!
IRS, "How Much Salary Can You Defer if You’re Eligible for More than One Retirement Plan?", link "Although a plan's terms may place lower limits on contributions, the total amount allowed under the tax law doesn’t depend on how many plans you belong to or who sponsors those plans."

Michael Kitces, "Coordinating Contributions Across Multiple Defined Contribution Plans", link. "However, unlike the 402(g) limit which applies once across all plans, the 415(c) overall limit applies separately for each plan."

Ed Slott, "MAKING SENSE OF THE 401(K) MULTIPLE PLAN LIMITS", link. "But, if you are in two plans sponsored by unrelated companies, you get the benefit of a separate overall limit for each plan.

Note: For small employer plans [like solo 401(k) plans and SEPs], the rules are more complicated because of IRS deduction limits."
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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Duckie
Posts: 9767
Joined: Thu Mar 08, 2007 1:55 pm

Re: 401k/403b Contributions

Post by Duckie »

Duckie wrote: Sun Mar 19, 2023 8:24 pm
boglelover77 wrote: Sun Mar 19, 2023 8:58 am Does the 401(k) Employee & Employer Contributions limit of $61,000 apply to all of these cumulatively or does each get a $61,000 limit since they are "unrelated employers"?
Since they are "unrelated" they each get the $61,000 limit.
I was wrong. :oops: It would be right except I forgot about the 403b exception. Unfortunately, because you can't have separate total limits if you have both a 401k and 403b plan, there is just one $61,000 limit across all three of your plans.
But the employee deferral limit of $20,500 is spread across all three. Your employEE contributions total $20,844 which is $344 over the $20,500 limit. That needs to be dealt with.
This is still accurate.
Can I contribute any more employer contributions to my solo 401k for 2022?
You have net 1099 income of $174,923. I don't know if that is after the one-half self-employment tax reduction or not. If you file as sole proprietor you can contribute as the employER up to 20% of net income. That means your $38,279 contribution is already over the limit which is under $35,000. You will need to fix that, too.
You and your employers have already contributed $29,884 to your W-2 401k and 403b plans, $344 of which is over the employEE deferral limit and must be removed. Given the 403b exception that leaves up to $31,116 room for you to contribute as the employER to your solo 401k. Since you have already contributed $38,279 you will have to remove the excess.

Edited because of 403b exception information.
Last edited by Duckie on Mon Mar 20, 2023 3:02 pm, edited 1 time in total.
Topic Author
boglelover77
Posts: 3
Joined: Sun Mar 19, 2023 8:20 am

Re: 401k/403b Contributions

Post by boglelover77 »

Perfect. Thank you both!
Topic Author
boglelover77
Posts: 3
Joined: Sun Mar 19, 2023 8:20 am

Re: 401k/403b Contributions

Post by boglelover77 »

I talked to my 403b provider and they said I was ok with the 402(g) limit since $3,065.87 was a required employee contribution. I was not aware that did not count towards the limit. Thanks for all of your help.
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Duckie
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Joined: Thu Mar 08, 2007 1:55 pm

Re: 401k/403b Contributions

Post by Duckie »

boglelover77 wrote: Tue Mar 21, 2023 8:21 am I talked to my 403b provider and they said I was ok with the 402(g) limit since $3,065.87 was a required employee contribution. I was not aware that did not count towards the limit.
Right, the employEE limit covers elective deferrals, not mandatory deferrals. A required 401a pension-type contribution is not the same as an optional 401k/403b contribution.

Okay, that $3065.87 required employee contribution takes care of what looked like a $344 employEE over-contribution. Good. And, that added to the $31,116 gets you up to $34,181 of space for your solo 401k employER contribution. But it's likely your $174,923 net income minus one-half of your self-employment taxes times 20% won't be under that $34,181, so you'll probably still have to remove some excess.
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