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BenefitsLink > Q&A Columns >

Who's the Employer?

Answers are provided by S. Derrin Watson, JD, APM

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.


Important notice:

Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of this and similar situations.

The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular Q&A is posted.


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