Hi,

I've been wondering about retirement plan maximums for 2007.

I see that for individuals (under 50) there are the following limits:

IRA $4,000
401k employee deferral $15,500
401k employer/employee total $45,000

Here is the situation. The individual in question has a job with an employer that provides a defined contribution pension plan as well as a 401k with matching. The individual is also self-employed and has a solo 401k plan.

I've assumed the total retirement contribution for '07 is 49K (45K for all retirements plans and 4K for the individual retirement arrangement).

Now I've found a couple sources suggesting that the 45K limit is per employer, and further, that the pension plan may actually fall outside this limit. That would make the '07 maximum for this individual (assuming adequate income at each job) at least 94K and possibly more.

Does anyone have any input into what is the actual maximum when there are multiple employers?

Thanks,
Lee

Zip Code: 52172

I agree with the numbers reflected in your question. Here is to expand on them a little:

1. The maximum IRA contribution this year for someone under the age of 50 are $4,000. If you're married, you and your spouse can each contribute $4k into an IRA, even if your spouse has no earned income. You have until 4/15/08 to contribute to your IRAs for 2007, and you can even direct your federal tax refund to go into your IRA on a Form 8888.

2. The maximum total salary deferrals for someone under the age of 50 for 2007 is $15,500. If you work for multiple employers, or are self-employed and have a Solo 401k, you're still limited to a total of $15,500 in deferrals from all of your employers.

3. The maximum that can be contributed into most retirement plans by any employer (including yourself if you're self-employed), and including your salary deferrals, is $45k this year. So if you work for multiple employers, and work enough hours at each to qualify to participate in the plan, each employer can contribute up to $45k on your behalf. Your salary deferrals are included in the $45k. The only catch is that the different employers can not have common ownership. So if you own 100% of a business, and are also a self-employed consultant, you would not be able to put away $45k on your behalf from both businesses into a defined contribution plan since both businesses have common ownership.

4. And yes, certain pension plans (called defined benefit plans) have a contribution ceiling much higher than the $45k allowed for defined contribution plans.

I hope this helps answer some of your questions. Seems like you've given a lot of thought to maxing out your retirement savings.

Zip Code: 01801

Thank you for the very fast and thorough reply!!!

This message board is a great resource!

Zip Code: 52172