Menu
This forum is no longer active. Please use the new forum at https://www.whitecoatinvestor.com/forum/

Max EmployEE contribution for multiple 401k’s

Home Retirement Accounts Max EmployEE contribution for multiple 401k’s

  • Avatar HogWild
    Participant
    Status: Physician
    Posts: 2
    Joined: 08/13/2019

    I’m currently transitioning between jobs.  My prior employment was W2 with a 403b.  I was able to contribute the max $19,000 before completing my time there.  My new position with also be W2 income, but I’m getting a $20,000 signing bonus as 1099 income.  My accountant thinks that I can contribute another $19,000 employEE contribution to a solo 401k.

    It is my understanding that you are only allowed to contribute an employEE contribution on $19,000 once per year between 403b/401k accounts.  I think that I could create a solo 401K with this 1099 signing bonus and contribute a $4000 (20% of $20,000) employER contribution.

    I was hoping to see if anyone could confirm my understanding of the rules here, and provide any links to IRS pubs/websites that I could share with my accountant.

    Thanks.

    #238452 Reply
    Avatar jacoavlu
    Moderator
    Status: Physician, Small Business Owner
    Posts: 2465
    Joined: 03/01/2018

    your accountant is wrong

    you get a $19k deferral limit for each independent employer

    a 403b is considered controlled by the participant and thus aggregated with any one participant 401k

    per the IRS https://www.irs.gov/retirement-plans/403b-plan-plan-aggregation-in-determining-compliance-with-irc-section-415c

    Aggregation Rule for 403(b) Plans

    Generally, 403(b) participants are each considered to have exclusive, control over their own annuity contract. See Treas. Reg. Section 1.415(f)-1(f)(1). Because the participant is considered to control and maintain the annuity contract, contributions to the 403(b) annuity contract are generally not aggregated with contributions to any other defined contribution plan qualified under IRC Section 401(a).

    An exception to this rule, however, is that a participant’s 403(b) annuity contract will be aggregated with one or more defined contributions plans where that particular participant is deemed to control the employer sponsoring the defined contribution plan qualified under IRC Section 401(a). See IRC Section 415(k)(4).

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #238485 Reply
    Liked by jfoxcpacfp, Peds
    jfoxcpacfp jfoxcpacfp
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 8368
    Joined: 01/09/2016
    I was hoping to see if anyone could confirm my understanding of the rules here, and provide any links to IRS pubs/websites that I could share with my accountant.

    Click to expand…

    How often do you and your accountant play role reversal?

    Johanna Fox Turner, CPA, CFP: I am not your financial advisor; any responses are for general purposes only
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #238524 Reply
    Liked by octopus85, G, Lordosis
    The White Coat Investor The White Coat Investor
    Keymaster
    Status: Physician
    Posts: 4656
    Joined: 05/13/2011
    Earnest refinancing bonus

    I’m currently transitioning between jobs.  My prior employment was W2 with a 403b.  I was able to contribute the max $19,000 before completing my time there.  My new position with also be W2 income, but I’m getting a $20,000 signing bonus as 1099 income.  My accountant thinks that I can contribute another $19,000 employEE contribution to a solo 401k.

    It is my understanding that you are only allowed to contribute an employEE contribution on $19,000 once per year between 403b/401k accounts.  I think that I could create a solo 401K with this 1099 signing bonus and contribute a $4000 (20% of $20,000) employER contribution.

    I was hoping to see if anyone could confirm my understanding of the rules here, and provide any links to IRS pubs/websites that I could share with my accountant.

    Thanks.

    Click to expand…

    Your accountant is wrong.

    https://www.whitecoatinvestor.com/multiple-401k-rules/

    I don’t see why it is your job to share things with your accountant. Why not just hire one who knows what they’re doing rather than paying for/doing your accountant’s job to educate themselves?

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #238529 Reply
    Liked by Hank, Peds
    Avatar HogWild
    Participant
    Status: Physician
    Posts: 2
    Joined: 08/13/2019

    Thanks everyone for the responses.  I agree.  I may need to shop around for a more knowledgeable accountant.  This one at least knows about backdoor Roth IRA and is charging a flat fee.  The received a bill from my last accountant after explaining the concept of a backdoor Roth over a few emails.

    #239476 Reply

Reply To: Max EmployEE contribution for multiple 401k’s

In case of a glitch or error, please save your text elsewhere, clear browser cache, close browser, open browser and refresh the page.

Notifications Mark all as read  |  Clear