If you switched companies or you work for more than one company with an employer-sponsored retirement plan, then you might be wondering if you can participate in multiple plans in a single year.
Luckily, there is no limit to the number of employer-sponsored accounts you can contribute to within one year – or even at the same time. However, you should be aware that there are annual limits on how much you can contribute across all your employer-sponsored plans.
Contribution limits apply across plans
Each year, the IRS sets the annual deferral limit (also known as the 402(g) limit), which outlines the maximum salary contributions you can make across all your employer sponsored plans. These plans include 401(k), Starter 401(k), 403(b), SARSEP IRA (Salary Reduction Simplified Employee Pension Plans), and SIMPLE IRA (Savings Incentive Match Plans for Employees) plans.
If you have an excess due to contributing to multiple plans in a year, the excess can be removed from any of the plans. However, each plan may have different deadlines to request the distribution based on their plan document and administrative procedures.
If you exceed the deferral limit, you may be eligible to receive a refund of the additional funds from your plan at Guideline provided you request it before March 1 of the following year. If you fail to remove the excess timely, the excess amount will be subject to taxation.
How to avoid over-contributing to employer-sponsored plans
To avoid making excess deferrals, you should keep track of how much you contribute across employer-sponsored plans for the year, especially if contributing to more than one account at the same time.
If you made contributions to a retirement plan with a previous employer, you should report those outside contributions to Guideline on your dashboard. This will help determine your total projected deferrals for the year and avoid over-contributing.
Images depicts limit for standard 401(k) plans for 2023. Limits may be changed by the IRS each year. See here for update employee contribution limits.
You can change your contribution rate at any time or Guideline will automatically adjust your rate if you are at risk of exceeding the limit based on our reported projections for the year.
If you report the outside contributions to Guideline, we will assume you want any excess distributed from the Guideline plan. To receive a refund and avoid taxation, you’ll need to report outside contributions by March 1 of the following year.
If you previously had another account with Guideline, you do not need to report those contributions for the year, as long as those accounts are linked.