By Ian Berger, JD
IRA Analyst
You probably know there’s a limit on the amount of pre-tax and Roth contributions you can make to your company savings plan each year. The 2025 elective deferral limit is $23,500 for 401(k), 403(b) and 457(b) plans and is either $16,500 or $17,600 for SIMPLE plans (depending on the size of your employer). If you’re age 50 or older, you can make additional catch-up contributions beyond these limits, and if you’re age 60, 61, 62 or 63, you may qualify for even higher catch-ups.
But what if you’re in two different plans at the same time or in two different plans during the same year after changing jobs? Do you get a separate elective deferral limit for your pre-tax and Roth contributions to each plan? The answer is generally no. The cap for pre-tax and Roth employee contributions is usually a “per-person” limit – not a “per-plan” limit. So, your contributions to all plans are normally aggregated when the limit is applied. It doesn’t matter if the plans are sponsored by companies that are totally unrelated under the tax rules.
Example 1: Samar, age 49, has a 401(k) through his regular job with Crypto Solutions and a solo 401(k) through a computer repair side gig. The most that Samar can defer between the two plans for 2025 is $23,500. It doesn’t matter that Crypto and his computer repair company are unrelated businesses.
Why do we say “generally,” “usually,” and “normally?” Well, like most tax rules, it’s just not that simple. There are two exceptions to the rule that requires aggregation of contributions to multiple plans. First, traditional (non-Roth) after-tax contributions, if allowed by the plan, don’t count towards the $23,500 elective deferral limit (although they do count towards the overall contribution limit, discussed in the next paragraph). Second, 457(b) plans have their own separate limit.
Besides the elective deferral limit, there’s another annual cap to worry about – the overall contribution limit (sometimes referred to as the “415 limit”). This limit is the maximum amount of ALL contributions that can be made to a plan in any year. Both your own contributions – pre-tax, Roth or after-tax (non-Roth) – and your employer’s contributions (matching or profit sharing) are counted. For 2025, the overall contribution limit is $70,000 (higher if catch-up contributions are made).
Generally, contributions made to two plans sponsored by businesses considered related under IRS rules are combined for the overall limit. But if you’re in two plans maintained by separate unrelated companies, contributions generally aren’t combined, and you get the benefit of a separate overall cap for each plan.
Example 2: Crypto Solutions and Samar’s computer business (from Example 1) are considered unrelated businesses. So, for 2025, Samar has a separate overall limit for each 401(k) plan and could theoretically have a total of $140,000 ($70,000 x 2) in combined contributions. However, to achieve that result, he would have to make a large amount of after-tax employee contributions and/or receive a large amount of employer contributions. In any case, Samar’s combined pre-tax and Roth contributions between the two plans would still be limited to $23,500.
https://irahelp.com/slottreport/what-are-my-contribution-limits-if-i-participate-in-two-company-savings-plans/