Annual Additions and dual Employment, Participant limitations Options

[dobsonlaw]

Situation: Employee works for P and is eligible to participate in P's retirement plan. Employee also works for H (an unrelated employer to P) and is eligible to participate in H's retirement plans.

Question: for the 415 annual additions limitations, do the contributions to the retirement plans for Employee have to be aggregated for both plans?

[Mike Preston]

No. But there must be something more to this story. The facts are too easy. If the employers are unrelated, the 415 limits are, too. Maybe they are unrelated in the ownership sense, but related in the affiliated service group sense? Probably should have stopped at "no."

[PLAN MAN]

Do P and H sponsor the same retirement plan?

[Mike Preston]

Hopefully, that isn't the case. If it is, the OP posted a very misleading description. But, hey, SOMETHING is up, here, so it just might be that!

[masteff]

I figured PlanMan's question was alluding to a multiemployer plan.

Maybe the OP will come back and expand on the question.... like is he asking from employee's perspective or the employer's perspective.

I think we're all searching for what the basis of the question is since the two employers are stated to be unrelated.

[dobsonlaw]

No. But there must be something more to this story. The facts are too easy. If the employers are unrelated, the 415 limits are, too. Maybe they are unrelated in the ownership sense, but related in the affiliated service group sense? Probably should have stopped at "no."

The employers are unrelated in the ownership sense. I don't believe they constitute an affiliated service group. But you bring up a good point. I will look at the ASG issue closer. Thanks.

[dobsonlaw]

Do P and H sponsor the same retirement plan?

No. They do not sponsor the same plan.

[dobsonlaw]

I figured PlanMan's question was alluding to a multiemployer plan.

Maybe the OP will come back and expand on the question.... like is he asking from employee's perspective or the employer's perspective.

I think we're all searching for what the basis of the question is since the two employers are stated to be unrelated.

Employee is a 1/4 owner of Employer P, a physician practice. Employee is also employed by a local hospital, Employer H. Full time employment at both employers.

[Stuartt]

I recall a PLR or Rev Rul from about 6+ years ago with similar facts. The IRS stated that there is no aggregation and the person could get the max in each plan. 401(k) deferrals are an exception to this rule.

It would be worth searching for this guidance.

[J Simmons]

In discussing the then $7,000 limit on elective deferrals, the House Committee Report for Sec 403©, Tax-Sheltered Annuities (TRA '86, P.L. 99-514) explained that "Unlike the overall limits on annual additions, which apply separately to amounts accumulated under plans of different employers, this $7,000 cap limits all elective deferrals by an employee."

[dobsonlaw]

In discussing the then $7,000 limit on elective deferrals, the House Committee Report for Sec 403©, Tax-Sheltered Annuities (TRA '86, P.L. 99-514) explained that "Unlike the overall limits on annual additions, which apply separately to amounts accumulated under plans of different employers, this $7,000 cap limits all elective deferrals by an employee."

Awesome. Thanks guys!!

[J4FKBC]

Is the hospital plan a 403(b) and the PC plan a normal DC type PS/401(k) or money purchase? If so, then:

Since the PC owner owns 50% or less of the PC, then the 415 limit is not aggregated with the hospital 403(b) plan. However, if the owner of the PC owned more than 50% of the PC, then their PC plan and the hospital 403(b) plan must be aggregated for 415 purposes.

The 402(g) limit for deferrals is an individual limit, aggregating all 403(b) and 401(k) deferrals together (without regard to 457(b) deferrals).