Can You Contribute to Multiple 401(k)s?
Navigate contributions to multiple 401(k)s by understanding the key differences between personal and per-plan limits to ensure your savings strategy is compliant.
It is possible to contribute to more than one 401(k) plan during a single tax year, a scenario that often arises when changing jobs or holding multiple positions. While participating in several plans is permitted, you are governed by Internal Revenue Service (IRS) contribution limits that apply to you as an individual, not to each separate plan.
Understanding these limits is the first step to ensure compliance and avoid tax penalties. The regulations cap the total amount you can defer from your salary into these accounts each year, regardless of how many employers you have.
Understanding the Contribution Limits
The Internal Revenue Service establishes annual contribution limits for retirement plans. The primary figure is the elective deferral limit, detailed in Section 402 of the Internal Revenue Code, which is $23,500 for 2025. This cap applies to the total amount an employee contributes from their salary across all 401(k), 403(b), and most 457 plans combined. It is a per-person limit, not a per-plan limit.
For example, if an individual works for Company A and contributes $15,000 to its 401(k), then in the same year begins working for Company B, they can only contribute a maximum of $8,500 to the new 401(k). The combined contributions to both plans cannot exceed the $23,500 threshold. This total includes both traditional pre-tax deferrals and any Roth contributions.
A separate overall contribution limit, under Section 415, also applies. For 2025, this limit is $70,000 and is applied on a per-plan basis, encompassing all contributions to a single plan. This includes your deferrals, employer matching funds, and other employer contributions like profit sharing. If your employers are unrelated, you could have total additions nearing this limit in each separate plan.
Individuals aged 50 and over can make additional catch-up contributions. For 2025, the standard catch-up amount is $7,500, allowing for a total of $31,000 in employee deferrals. A new provision for 2025 allows those aged 60 to 63 to make a higher catch-up contribution of $11,250, if their plan permits. This catch-up is also a per-person limit applied on top of the regular deferral cap.
Managing Contributions Across Multiple Plans
The responsibility for tracking total contributions falls on you, as each employer’s payroll system will not have visibility into contributions made to another company’s plan. Proactive management is necessary to avoid exceeding the annual limit. Regularly reviewing pay stubs from all employers is a fundamental step to monitor your year-to-date deferrals.
When your combined contributions approach the annual IRS limit, you must contact the payroll or human resources department at one or all of your jobs. You will need to submit a formal request to stop or adjust your contribution percentage for the rest of the year. This communication is necessary to prevent an over-contribution.
A common strategy is to prioritize contributions to capture the full employer match from each plan, ensuring you do not leave free money on the table. You might contribute just enough to each plan to receive the maximum match. After securing the match from all employers, you can direct remaining contributions up to the annual limit to a single plan, perhaps one with better investment options or lower fees.
Correcting Excess Contributions
If you contribute more than the annual deferral limit, you must take prompt action to avoid significant tax consequences. First, calculate the exact amount of the over-contribution, referred to as an “excess deferral,” by totaling all elective deferrals made during the calendar year.
Next, notify your plan administrator and request a corrective distribution of the excess amount plus any earnings it generated. You can choose which plan to withdraw the funds from. This request must be made by the tax filing deadline, April 15 of the year following the over-contribution.
If the corrective distribution is completed by the deadline, the tax implications are manageable. The excess contribution is included in your taxable income for the year it was contributed. The earnings are reported as taxable income in the year they are distributed, and your plan administrator will issue a Form 1099-R to report the distribution.
Failing to withdraw the excess contribution and its earnings by the deadline results in double taxation. The excess amount is taxed in the year it was contributed and will be taxed again when it is eventually distributed in retirement. This penalty underscores the importance of correcting any over-contributions in a timely manner.