I first wrote about multiple 401(k) accounts back in 2013 in a post entitled Beating the $51K Limit (for which I am still eternally grateful to Mike Piper for the pearl that grew into that post). Thanks to inflation, the $51,000 limit has since grown into the $72,000 limit [2026 — visit our annual numbers page to get the most up-to-date figures]. But all the same principles still apply.
I get tons of questions on multiple employer 401(k)s in the WCI Forum, podcast, Facebook, and Reddit groups; in the comments sections of the posts on this site; and in my email inbox. Heck, this post already has over 1,300 comments! Mostly, I wrote this post so I could copy and paste its URL instead of typing the same old stuff over and over again. (Come to think of it, that was the motivation for starting this site in the first place.)
Can You Have Multiple 401(k)s?
Here's the deal. Many physicians work for multiple employers or work as an employee and either as an independent contractor or a consultant. Many others have a side job of another type. Their incomes are far higher than they require for their current spending needs. But they're behind on their savings, or they otherwise have a desire to maximize the amount of money they can put into retirement accounts, especially tax-deferred retirement accounts.
These types of accounts minimize tax, maximize returns, increase asset protection, and facilitate estate planning. Who wouldn't want to get more money into them? However, most of these doctors are surprised to learn that they can have more than one 401(k). That's right,
OK, now that I've gotten that out of my system, let's make a list of the seven governing rules for using more than one 401(k).
More information here:
401(k) and IRA Limits Are Totally Separate
What to Do with Multiple 401(k) Accounts – Multiple 401(k) Rules
Rule #1 – One Employee Contribution Total
In 2026, the IRS only allows you to make a total of $24,500 ($33,500 if 50 or over or $35,750 if you're between 60-63) worth of “employee contributions” to all of your 401(k)s or 403(b)s, no matter how many unrelated employers you have. If you have access to two 401(k)s, you can split this up, but the total must be $24,500 ($33,500 if 50 or over or $35,750 if you're between 60-63) or less.
Rule #2 – $70,000 Per Unrelated Employer
The IRS also only allows you and your employer (which might also be you) to put a total of $72,000 for 2026 ($80,000 if 50+ or $83,250 if you're between 60-63) per year into a 401(k). This includes the employee contribution, any match from the employer, and any employer contributions. This is the same limit for a SEP-IRA (if <50), which is technically all employer contributions.
However, unlike rule #1, this limit applies to each unrelated employer separately.
“Unrelated employers” means that the businesses doing the employing are not a “controlled group.” There are two types of controlled groups:
- “Parent-Subsidiary” Group: This is when a parent business (corporation, sole proprietor, LLC, partnership, etc.) owns 80%+ of another business.
- “Brother-Sister” Group: This is where five or fewer individuals, estates, or trusts own a controlling interest (again, 80%+) of two different businesses.
If the two businesses you are involved in aren't a controlled group and if they each have a 401(k), (or a 401(k) and a SEP-IRA), you get two $72,000 limits. Pretty cool, huh? There are several common examples where this could apply to a physician:
Multiple 401(k)s – Example #1
A 40-year-old single physician is an employee of two completely unrelated hospitals. The first pays her $200,000 per year and matches 100% of the first $5,000 she puts into the 401(k). It also offers her a 457. The second pays her $100,000 per year and matches 50% of the first $7,000 she puts into her 401(k). What retirement accounts should this physician use to maximize her contributions in 2026?
- Hospital 1 401(k): At least $5,000 (plus the $5,000 match) = $10,000
- Hospital 1 457: $24,500
- Hospital 2 401(k): At least $7,000 (plus the $3,500 match) = $10,500
- Plus another $11,500 into either hospital's 401(k) (pick the one with the better investments)
- Plus $7,500 into a Backdoor Roth IRA
- Total: $64,000
Multiple 401(k)s – Example #2
A 40-year-old married physician whose spouse doesn't work is a partner in a 100-doctor partnership that offers a 401(k)/profit-sharing plan in which he can “self-match” up to the $72,000 limit. The partnership also offers a defined benefit/cash balance plan with a $30,000 limit. He makes $300,000 practicing medicine. He is also the sole owner of a website on the side that makes $300,000 per year and has its own individual 401(k). Both 401(k)s offer a Roth option. What is the maximum amount he can put into Roth accounts in any given year without doing a conversion of tax-deferred or after-tax dollars?
- Partnership 401(k)/PSP: $72,000, of which $24,500 can be Roth
- Partnership DB/CBP: $30,000, of which $0 can be Roth
- Website individual 401(k): $72,000, of which $24,500 could be Roth if none of the Partnership 401(k) money represents an “employee contribution.” Otherwise, $0 Roth.
- Personal Backdoor Roth IRA: $7,500
- Spousal Backdoor Roth IRA: $7,500
- HSA: $8,750
- Total: $197,750, of which $49,000 can be Roth
Multiple 401(k)s – Example #3
This 52-year-old married physician (spouse doesn't work) is an employee of a hospital where she is paid $200,000. She has a 401(k) with a set $20,000 employer profit-sharing contribution (not a match), and the hospital pays most of the premiums on a non-high deductible health plan. She moonlights across town as an independent contractor, and she is paid on a 1099, where she earns $100,000. She has opened up an individual 401(k). The hospital's 401(k) has terrible investments and high fees. How should she allocate her retirement savings to best use these options?
- Hospital 401(k): $20,000 employer contribution
- Individual 401(k): $32,500 employee contribution (50+) + 20% * $100,000 = $20,000 employer contribution. That's a total of $52,500 (technically slightly less due to Rule #5 below)
- Personal Backdoor Roth IRA: $8,600 (50+)
- Spousal Backdoor Roth IRA: $8,600 (50+)
- Total: $89,700
Multiple 401(k)s – Example #4
A 40-year-old single physician is in a business partnership with one other physician, and they have several employees. Due to hassles and the costs of their employees, they have opted to use a SIMPLE 401(k) for their practice. He makes $200,000. He also does some consulting work on his own as a sole proprietorship, where he is paid on a 1099, about $50,000 per year.
He and his physician business partner recently opened up another business where they sell a medical device. They are the only owners of both the practice and of the corporation that sells the device (which has no employees). He makes another $50,000 from this company, of which $25,000 is salary and $25,000 is a “distribution” from the S Corp. What kind of retirement setup should this physician have?
- Practice SIMPLE IRA: $17,000 employee contribution plus $6,000 (3% of salary) employer contribution: $23,000
- Unfortunately, these three entities are part of a “controlled group,” so he cannot have a separate retirement plan for either of the other two entities that ignore the employees in the practice. The presence of a SIMPLE IRA also makes it tough to use a Backdoor Roth IRA due to the pro-rata rule.
- Total: $23,000
Rule #3 – Employer Contributions Are 20% of ‘Net Earnings from Self-Employment'
When calculating the employer contribution for a SEP-IRA or an individual 401(k), you use your “net earnings from self-employment.” This includes any amount used for an employee contribution but excludes the amount used for S Corp distributions (those aren't “earned income” and can't be used for retirement account contributions) and the amount used for the employer half of the payroll taxes (same as the self-employment tax deduction).
The employer contribution in an individual 401(k) and a SEP-IRA is exactly the same (for those under 50), but since you can also make an employee contribution into an individual 401(k) (and 401(k) money isn't included in the Backdoor Roth pro-rata calculation), a 401(k) is generally the better option for the self-employed—even if it is slightly more complicated to open (and must be opened in the calendar year rather than before Tax Day of the next year). The possibility of using a Roth SEP-IRA could provide another way around this rule.
Note that an employee owner of an S Corp is limited to 25% of W-2 compensation as an employer contribution.
Rule #4 – You Only Get One SEP, SIMPLE, or 401(k) Per Unrelated Employer Per Year
Each unrelated employer should only have one of these three types of accounts for each tax year. You can technically have more than one, but they share a combined limit. However, you could open a SEP-IRA for your self-employment income in March 2026 for tax year 2025, and then open an individual 401(k) in June 2026 for tax year 2026 if you like. Remember that just because you are the sole owner of two separate businesses doesn't mean you get two different retirement accounts. Those businesses are a controlled group.
Rule #5 – These Rules Have Nothing to Do with 457s, IRAs, or HSAs
457(b)s, Backdoor Roth IRAs, and HSAs all have their own separate limits that have nothing to do with the limits for 401(k)s, 403(b)s, SEP-IRAs, and SIMPLE IRAs. Putting more into a Roth IRA doesn't mean you can't still max out your 401(k).
Rule #6 – Catch-Up Contributions Also Allow You to Beat the $72,000 Limit
Many accounts have catch-up contributions if you're old enough (usually 50 or older, but 55 or older for HSAs). Roth IRAs have a $1,100 catch-up, HSAs have a $1,000 catch-up, and 401(k)/403(b)s have an $8,000 catch-up (unless you're 60-63, when the catch-up is $11,250). That $8,000 catch-up is in addition to the $72,000 limit, so if you're over 50, you're self-employed with lots of income, and you're making your full employee contribution to your individual 401(k), the $72,000 limit becomes an $80,000 limit. Note that 457(b) and 403(b) catch-ups work slightly differently.
Rule #7 – 403(b)s Are Not 401(k)s
Many physicians have access to a 403(b) by working for a hospital or public entity. There is a unique rule for 403(b)s, however, which will prevent many doctors who use a 403(b) at their main job from maxing out an individual 401(k) on the side—at least if they own 50% or more of the company for which they have an individual 401(k) (and they probably do). It doesn't make much sense, but neither do many tax and retirement plan rules. Basically, your 403(b) at work, unlike a 401(k), is considered to be controlled by you. So you are stuck with the same 415(c) limit of $72,000 (see Chapter 3 at the link). If you put $24,500 into your 403(b) at work, you are only allowed to put $72,000-$24,500=$47,500 into an individual 401(k).
More information here:
Freedom vs. Fiduciary Responsibility in a Company 401(k)
What to Do After Maxing Out 401(k) and Roth IRA
My Accountant Doesn't Believe You
Having access to multiple 401(k)s is an unusual situation among Americans in general, even if it is quite common among doctors. As such, an unbelievable number of accountants (and especially their clients) have a misunderstanding of the rules noted above, particularly the one about having a separate $72,000 limit for each unrelated employer. However, taking a look at this article on IRS.gov written in layman's language, you can see this is true (note that the 2026 contribution limits have not been added to that article):
Overall limit on contributions
Total annual contributions (annual additions) to all of your accounts in plans maintained by one employer (and any related employer) are limited. The limit applies to the total of:
- elective deferrals (but not catch-up contributions)
- employer matching contributions
- employer nonelective contributions
- allocations of forfeitures
The annual additions paid to a participant’s account cannot exceed the lesser of:
- 100% of the participant's compensation, or
- $69,000 ($76,500 including catch-up contributions) for 2024; $66,000 ($73,500 including catch-up contributions) for 2023; $61,000 ($67,500 including catch-up contributions) for 2022; $58,000 ($64,500 including catch-up contributions) for 2021; and $57,000 ($63,500 including catch-up contributions).
However, an employer’s deduction for contributions to a defined contribution plan (profit-sharing plan or money purchase pension plan) cannot be more than 25% of the compensation paid (or accrued) during the year to eligible employees participating in the plan (see Employer Deduction in Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans).
There are separate, smaller limits for SIMPLE 401(k) plans.
If that's not enough for your accountant, you can simply go straight to the actual code sections in question—in this case, 415(c) (where the $72,000 limit comes from, originally $40,000). Be sure to scroll through subsections (f) through (h), where the relevant examples are used:
(f) Combining of plans
(1) In general
For purposes of applying the limitations of subsections (b) and (c)—
(A) all defined benefit plans (whether or not terminated) of an employer are to be treated as one defined benefit plan, and
(B) all defined contribution plans (whether or not terminated) of an employer are to be treated as one defined contribution plan.
Note how it says all defined contribution plans OF AN EMPLOYER are to be treated as one plan. Section (g) reads similarly:
(g) Aggregation of plans
. . . the Secretary, in applying the provisions of this section to benefits or contributions under more than one plan maintained by the same employer . . . with respect to which the participant has the control required under section 414(b) or (c) . . . shall . . . disqualify one or more . . . plans . . . until such benefits or contributions do not exceed the limitations contained in this section.
Again, note the keywords—BY THE SAME EMPLOYER. So, different employer, totally separate $72,000 limit.
What do you think? Are you using multiple retirement plans at unrelated employers? What is your setup?
[This updated post was originally published in 2015.]