I have several jobs. Can I contribute the maximum to multiple employer retirement plans?

By Denise Appleby AAA
A:

It depends. A question such as this requires detailed information in order to provide a helpful response. Here is a general response that may be of help.

Questions: Are any of these companies related or affiliated? For instance, are they owned by the same people? Do you own any of the companies? Are any of the companies part of a parent company? Do any of the companies share resources, staff etc? If the answer is yes to any of these questions, the answer may change from what is provided below. If the answer is no, then the limit is as follows:

Employer Plans
Your aggregate salary deferral contributions cannot exceed $14,000 (plus an additional $4,000 if you reach at least age 50 by December 31, 2005). This means that you can break up the $14,000 among the plans, but your total salary deferrals should not be more than $14,000.

In addition, you may receive employer contributions (contributions from your employer, such as profit sharing and matching contributions) to each plan to the tune of $42,000. However, the $42,000 is reduced by any salary deferral contributions made to the plan. For instance, if you defer $10,000 to one plan, your employer may contribute no more than $32,000 for 2005 (total $42,000). Of course, your contributions are determined by your compensation. For instance, if your employer decides to contribute 25% of your compensation to the plan, and you receive $50,000 in wages, then the employer contribution will be $12,500.

IRAs
Regardless of the number of IRAs you own, whether Roth and Traditional, or either one or the other, your aggregate IRA contribution for 2005 is limited to $4,000, plus an additional $500 if you reach age 50 by December 31, 2005.

As I mentioned earlier, detailed information, including compensation received from each employer and answers to the questions listed earlier would be required in order to provide a definite response.

To learn more, see Making Salary Deferral Contributions - Part 1 and Part 2.

This question was answered by Denise Appleby
(
Contact Denise)

RELATED FAQS

  1. What is the difference between a Traditional and a Roth IRA?

    The main difference between a Traditional and a Roth IRA is the way contributions are deducted for tax breaks. Whereas contributions ...
  2. Should I collect early Social Security?

    The earliest age that you can start receiving social security benefits is age 62. Full retirement was age 65 for many years; ...
  3. I am in my mid thirties and have nothing invested for retirement. Is it too late ...

    It is never too late to start saving for retirement. Even starting at age 35 means you will have more than 30 years to save.The ...
  4. I work for two companies. How much can I contribute to each company's SIMPLE IRA?

    It depends.If you work for two companies that are unrelated and unaffiliated, you can make salary deferral contributions ...
RELATED TERMS
  1. Gold IRA

    Definition of Gold IRA
  2. Eligible Transfer

    An IRS-allowed movement of assets into or out of an individual ...
  3. Death Master File (DMF)

    Also known as Social Security Death Index. A list of people whose ...
  4. Leveraged Benefits

    The use – by a business owner or professional practitioner – ...
  5. Multibank Holding Company

    A company that owns or controls two or more banks. Mutlibank ...
  6. Short Put

    A type of strategy regarding a put option, which is a contract ...
comments powered by Disqus
Related Articles
  1. An Overview Of The Pension Benefit Guaranty ...
    Retirement

    An Overview Of The Pension Benefit Guaranty ...

  2. Business Owners: Rules For Qualified ...
    Entrepreneurship

    Business Owners: Rules For Qualified ...

  3. Keeping Track Of Retirement Plan Assets
    Retirement

    Keeping Track Of Retirement Plan Assets

  4. Tips On How To Use IRAs To Boost Retirement ...
    Retirement

    Tips On How To Use IRAs To Boost Retirement ...

  5. Tax-Saving Advice For IRA Holders
    Taxes

    Tax-Saving Advice For IRA Holders

Trading Center