Can someone have multiple Defined contribution plans?
I believe the answer is yes, but then is the maximum contribution amount $51,000 on a personal basis or per plan basis?
ie someone is a w2 employee – they max out their 401k ($20,500 w/ catchup) – the employer kicks in $12,500. So total into 401k is $33,000
They also have a seperate company (doing a different job) and would like to contribute to a SEP. Can they max out the SEP to $51,000 or are they limited to $18,000
IE. 2 completely seperate jobs and 2 plans
Thanks
Permalink Submitted by Martin Helmer on Fri, 2009-03-13 19:09
If compensation is high enough, $46,000 can go into the SEP, assuming the 2 businesses are unrelated & none of the SEP contribution is via elective deferral. I.e. for one thing, the plan is not a SARSEP.
Permalink Submitted by Allen Neuenschwander on Fri, 2009-03-13 19:49
what to you mean by “none of the SEP contribution is via elective deferral.” In this case it is a single person – self employment income – so how is that treated?
Permalink Submitted by Martin Helmer on Fri, 2009-03-13 20:33
I was talking about what amounts to an infrequent exception. Prior to 1997, a SEP was allowed to contain a 401k-like feature. Just like with a 401k a so called SARSEP can have both employer and employee contributions. Even with a 1 person business this configuration is still possible. Some of those plans that began before 1997 are grandfathered and are still around.
Each unrelated employer gets its own $46,000 limit. But any of those contributions that are ’employee elective deferrals’ do get aggregated among all employers. It’s likely this whole point is unrelated to the current situation. With a 1 person business and enough compensation, you can do the whole $46,000 via employer contribution. But you don’t get another $5,000 catchup. The catchup limit is $5,000 per person and is via employee elective deferral only. In your case, you’ve maxed out on elective deferrals at $20,500. If you worked at still another unrelated employer who has a 401k plan, you could not defer anything at all as an employee but could get a third $46,000 limit via employer contributions.