You Can Have More Than One 401(k)

These types of accounts minimize tax, maximize returns, increase asset protection, and facilitate estate planning.

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Who wouldn’t want to get more money into them? However, most of these doctors are surprised to learn that you can have more than one 401(k). That’s right.

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You Can Have More Than One 401(k)

The IRS only allows you to make a total of $18,500 ($24,500 if 50 or over) worth of “employee contributions” to all of your 401(k)s (or 403(b)s) no matter how many unrelated employers you have.

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Unrelated employers means that the businesses doing the employing are not a “controlled group.” There are two types of controlled groups.

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The first is a “parent-subsidiary” group. The second type is a “brother-sister” group. So if the two businesses you are involved in aren’t a controlled group, and they each have a 401(k), you get two $55K limits

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Rule # 3: Employer Contributions Are 20% of “Net Earnings From Self-Employment”

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This includes any amount used for an employee contribution, but excludes the amount used for S Corp distributions.

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Each unrelated employer should only have one of these three types of accounts for each tax year.

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Remember that just because you are the sole owner of two separate businesses doesn’t mean you get two different retirement accounts. Those businesses are a controlled group.

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You Can Have More Than One 401(k)

These types of accounts minimize tax, maximize returns, increase asset protection, and facilitate estate planning.

Who wouldn’t want to get more money into them? However, most of these doctors are surprised to learn that you can have more than one 401(k). That’s right.

You Can Have More Than One 401(k)

The IRS only allows you to make a total of $18,500 ($24,500 if 50 or over) worth of “employee contributions” to all of your 401(k)s (or 403(b)s) no matter how many unrelated employers you have.

Rule # 1: One Employee Contribution in Total

Unrelated employers means that the businesses doing the employing are not a “controlled group.” There are two types of controlled groups.

Rule # 2: $55K Per Unrelated Employer

The first is a “parent-subsidiary” group. The second type is a “brother-sister” group. So if the two businesses you are involved in aren’t a controlled group, and they each have a 401(k), you get two $55K limits

Rule # 3: Employer Contributions Are 20% of “Net Earnings From Self-Employment”

This includes any amount used for an employee contribution, but excludes the amount used for S Corp distributions.

Each unrelated employer should only have one of these three types of accounts for each tax year.

Rule # 4: You Only Get One SEP, SIMPLE, or 401(k) Per Unrelated Employer Per Year

Remember that just because you are the sole owner of two separate businesses doesn’t mean you get two different retirement accounts. Those businesses are a controlled group.

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