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IRAs and Roth IRAs
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403 B-Profit Sharing Question

Can I contribute to a 403 B plan in addition to a profit sharing plan from separate employers?

If so, are their aggregate limits to the amount that I can defer?


Zip Code: 18901

Re: 403 B-Profit Sharing Question

For 2009 and 2010, there are two limits to most retirement plans.

1. There is an annual limit of $16.5k ($22k if 50 or older) that a person can contribute through salary deferrals. This includes 401k plans, 403b plans, certain 457 plans, and SIMPLE IRAs. So if you work for more than one employer, and both employers allow for salary deferrals, the total of all of your salary deferrals is capped at $16.5k per year.

2. There is also a limit of $49k that can be put away for any employee through a defined contribution plan. So if you max out the salary deferrals, your employer can put away an additional $32.5k through a match and/or profit sharing plan contribution. This limit is by employer, and not by employee, as long as the businesses don't have common ownership.

Let's say you have your own practice, make pretty good money, and max out a SEP for $49k. If you also work at a hospital (that you don't own), you can max out the allowable salary deferrals of $16.5k. You can also participate in whatever match and profit sharing plan they have.

In summary, while for employee salary deferrals the $16.5k (or $22k if 50 or older) is an annual limit per person, the $49k max for employer contributions is per plan for unrelated businesses.

I hope this answers your question.

Zip Code: 01801

Re: 403 B-Profit Sharing Question

Thanks for the reply.

So if I understand you correctly I can put away 65k/ year?

Zip Code: 18901

Re: 403 B-Profit Sharing Question

Actually, depending on the plans offered by each employer, and the amount you earn from each employer, and your age, you could put away as much as $103.5k per year. I got that number based on a maximum annual contribution per plan of $49k plus an additional $5.5k in catch up contributions by a person who is 50 or older.

It's not very likely, however, that you will find yourself in a situation where you will be working for two employers who will each putting away the max of $49k on your behalf.

In your case, it appears you will be working for one employer who is maxing out the $49k, and then you are working for a second employer that offers a 403b plan. As long as you are not making salary deferrals into a 401k plan through the first employer, you should be able to elect to have $16.5k of your salary from your second job go into that employer's 403b plan.

Zip Code: 01801