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Two Companies = Two Section 415 Limits?
(Posted May 3, 2012)
Question 314: Company A is unrelated to Company B. If I work for both companies at the same time, can I receive a benefit under each company's plan of the full amount of the 415 limit while completely ignoring my involvement with the other company and its plan?
Answer: Suppose I work by day for Ford and by night for United Airlines -- two companies that are unrelated to each other. I participate in each company's 401(k) plan. I cannot defer more than $22,500 in 2012 (I'm eligible for the catch-up) between the two of them, because the deferral limit in 402(g) is an individual limit. I must include in federal income the amount of any deferrals I make over that limit. But I do get two 415 limits because the 415 limit is determined per employer. So if there were employer contributions, I could receive an allocation of $50,000 in the Ford plan and $50,000 in the United plan.
By contrast, if Ford and United were related (say I owned 80% of each), then I would be stuck with a single 415 limit between the two companies.
Chapter 10 of my book, Who's the Employer (now in its 6th edition), explores the consequences of related employer status in detail.
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