Can You Max Out a 401k at Two Different Jobs? Rules and Limits Explained
Learn how 401(k) contribution limits apply when you have multiple jobs, and how to manage contributions across different plans to stay compliant.
Switching jobs or working multiple roles in a year can raise questions about managing retirement savings across different employers. A common point of confusion involves contributing to two separate 401(k) plans and understanding the applicable rules, particularly regarding contribution limits. Missteps can lead to tax penalties or missed savings opportunities.
This guide clarifies the key rules for participating in multiple 401(k) plans, helping you comply with IRS regulations while maximizing your retirement benefits.
Eligibility for Multiple 401k Plans
You can participate in as many 401(k) plans as you are eligible for through different, unrelated employers. Eligibility for each plan is determined independently based on that specific employer’s rules and federal guidelines.
Federal law, primarily the Employee Retirement Income Security Act (ERISA), sets minimum participation standards.1U.S. Department of Labor. FAQs About Retirement Plans and ERISA Generally, employers offering a 401(k) must allow employees to participate if they are at least 21 years old and have completed one year of service, often defined as 1,000 hours worked in a 12-month period.2Internal Revenue Service. 401(k) Plan Qualification Requirements Employers may adopt less restrictive requirements, allowing earlier participation, but cannot impose stricter ones.
Recent legislation, including the SECURE Act and SECURE 2.0 Act, has expanded eligibility for certain part-time employees. Starting in 2024, employees working at least 500 hours for three consecutive years must generally be allowed to make their own contributions (elective deferrals). This service requirement shortens to two consecutive years after December 31, 2024.
If you work for two separate companies, you must meet each company’s distinct eligibility criteria. Your eligibility for one plan does not impact your eligibility for another, assuming the employers are unrelated. Always review the Summary Plan Description (SPD) for each plan to understand its specific rules.3Internal Revenue Service. 401k Resource Guide Plan Participants Summary Plan Description
Overall Contribution Rules
When contributing to 401(k) plans from different employers in the same year, the most significant rule involves the limit on your personal contributions, known as elective deferrals. This limit, governed by Internal Revenue Code Section 402(g), applies to the total amount you contribute across all 401(k) and similar plans (like 403(b)s). It is an individual limit, not per plan or per employer. For 2024, this limit is $23,000.4Internal Revenue Service. Retirement Topics – 401(k) and Profit-Sharing Plan Contribution Limits
Individuals aged 50 or older by year-end can make additional “catch-up” contributions if their plans allow. For 2024, the catch-up limit is $7,500.5Internal Revenue Service. Retirement Topics – Catch-up Contributions This is added to the regular limit, permitting eligible participants to contribute a total of $30,500 ($23,000 + $7,500) across all their plans combined.
Separate from your individual contribution limit, there’s an overall cap on total annual additions to each employer’s plan, detailed in Internal Revenue Code Section 415(c). Annual additions include your contributions, employer matches, profit-sharing, and allocated forfeitures. For 2024, this limit is the lesser of 100% of your compensation from that specific employer or $69,000. This limit applies per unrelated employer. Catch-up contributions do not count against this $69,000 limit. Additionally, the amount of compensation used for calculating contributions is capped at $345,000 for 2024.6Internal Revenue Service. Notice 2023-75: Cost-of-Living Adjustments for Retirement Plans for 2024
Coordination with Plan Administrators
Managing contributions across plans from different, unrelated employers requires personal diligence because the plan administrators operate independently. Each administrator manages only their specific company’s plan, handling tasks like processing contributions, managing distributions, and ensuring compliance for that plan alone.
Administrators generally do not share information about an employee’s participation or contribution levels in other companies’ plans. Therefore, the responsibility rests entirely on you to track your total elective deferrals across all plans to avoid exceeding the annual individual limit.
Monitor your contributions throughout the year using pay stubs or online plan portals for each job. Be aware of the current IRS elective deferral limit. As your total contributions near this cap, you must contact the payroll department or plan administrator at one or both employers to adjust your contribution rate.7Internal Revenue Service. Consequences to a Participant Who Makes Excess Annual Salary Deferrals Procedures for changing contributions vary by plan and are typically outlined in the Summary Plan Description (SPD).
Common Mistakes to Avoid
Careful attention is needed when managing multiple 401(k) contributions to prevent common errors. A frequent mistake is exceeding the individual elective deferral limit ($23,000 for 2024, plus $7,500 catch-up if eligible).8Internal Revenue Service. 401(k) Plan Fix-It Guide – Excess Elective Deferrals Under IRC Section 402(g) Since this limit applies to the combined total across all plans, failing to track contributions from each job can easily lead to over-contributing.
Another potential issue involves employer matching contributions. Not understanding the specific matching formula for each plan can lead to missed funds. For example, contribution strategies might need adjustment if one plan matches per pay period while another matches annually. Stopping contributions mid-year at one job could also forfeit part of the match, depending on the plan’s rules.
Confusing the different contribution limits is also common. Some mistakenly believe they can personally contribute up to the higher overall annual additions limit (Section 415(c)) across their jobs, not realizing their own deferrals are subject to the lower aggregate limit (Section 402(g)).
Mismanaging catch-up contributions can occur if individuals aged 50 or over assume the $7,500 limit applies per plan, rather than as a total across all plans. Remember, contributions typically only count as catch-up once the regular deferral limit has been met across all plans combined.
Overlooking the vesting schedule for employer contributions in each plan is another pitfall, especially when changing jobs. While your own contributions are always fully vested, employer contributions often vest over time. Leaving a job before becoming fully vested means forfeiting the unvested portion of employer funds in that specific plan. Consider vesting schedules when allocating contributions or planning job changes.