If an individual has a Solo 401k for a Schedule C business and participates as an employee in the 401k of an unrelated and unaffiliated company, is the individual permitted to make a $15,000 salary deferral comtribution to each of the plans, or is the aggregate salary deferral contribution limited to $15,000?
Thanks, Alan, for your response. To clarify – are you saying that the individual can defer only $15,500 total, even if he/she participates in two 401(k) plans? My understanding is that total contributions for the two unaffiliated/unrelated plans can equal 45K each (90K). This limit would be hard to reach without a deferral/match and profit sharing provision for each. Is this correct?
402g addresses the amount of the taxpayer’s deferral – which is 15,500 in total regardless of number of qualified plans. Only a 457 plan could be additional. Catchup contributions can also be an additional 5,000.
Sec 415(c) (total contributions) applies to your 45,000 limit per unaffiliated plan and includes all employee deferrals, matching contributions, forfeitures etc.
Therefore, if the combined deferral limit of 15,500 were able to produce total contributions per plan of 45,000 (unlikely), then the 90,000 would be conceivable. The above two code sections each have their separate limits, rules, and corrective mechanisms.
Thanks, again, Alan. That clarification was extremely helpful. I appreciate the time you took to respond.
Betsey
Permalink Submitted by Alan Spross on Tue, 2007-08-07 21:06
The 402(g) limit of 15,500 for 2007 would apply to combination of all 401k plans available to participant.