Contributing to Multiple 401Ks in a Single Year

[Huston55]

I've searched old threads and the IRS site, and cannot find guidance on this, thus the questions.

I am transferring employers around mid-year this year and want to know what the contribution limits are. Seems the current annual contribution limit is $17,500 + $5,500 catch-up (I'm >55).

So, my questions are:

1. Can I make two catch-up contributions, one with each employer?
2. How is the maximum salary eligible for contributions limit applied? Is it per employer or, a single combined annual limit?

 

[MooreBonds]

I've searched old threads and the IRS site, and cannot find guidance on this, thus the questions.

I am transferring employers around mid-year this year and want to know what the contribution limits are. Seems the current annual contribution limit is $17,500 + $5,500 catch-up (I'm >55).

So, my questions are:

1. Can I make two catch-up contributions, one with each employer?

Catch-up and overall contribution limits are based on the $, not the # of accounts - so the same limits apply if you are contributing across 10 401(k)s, or just 1. The total contributions to all of your 401(k)s in one year cannot exceed the $17,500 base plus $5,500 catch-up. So you can put catch-up $ into both 401(k)s, as long as the total catch-up doesn't exceed $5,500 and your total base contribution doesn't exceed $17,500 when you combine both plans.

Having said that, be mindful that some employer's fiscal years end on different dates (December 15, December 31, etc.), so depending on how you set up your withholding percentage, keep in mind that the last week or two might not count for this year.

2. How is the maximum salary eligible for contributions limit applied? Is it per employer or, a single combined annual limit?

Are you referring to how some 401(k)s limit what % of income you can contribute to a 401(k)? In that case, it all depends on what your income is at each employer. If a plan says you can contribute up to 50% of your income to the 401(k), then you can put aside up to 50% of your income into their 401(k). It doesn't matter what the other 401(k) plan says.

If you're referring to the Highly Compensated Employee provisions of some retirement plans regarding 401(k) and other retirement plan contributions, I can't tackle that off of the top of my head.

 

[soupcxan]

Be careful, it's up to the employee, not the two unrelated employers, to ensure you don't contribute more than the limit of $17.5+5.5k. See this page.

401(k) Resource Guide - Plan Participants - Limitation on Elective Deferrals

 

[growing_older]

I've changed employers mid-year and can tell you from experience, the dollar limits for contributions and catchup are for YOU not for your employer. An employer may have their own rules like only X% per pay period, but you are responsible for staying under the IRS limits.

For what it's worth, most empolyers can stop your contributions at whatever hard dollar figure you specify, so if you only have $2375.50 left under the limit, tell your new employer and their payroll system will make sure you do not go over.

 

[Huston55]

Thx all for the answers and the link.