A question that gets asked a lot by those who want to maximize their investments has to do with whether or not you can contribute to more than one 401(k) account at a time. The easy answer is yes, you can! But before you go stashing your savings into your various retirement accounts, it’s wise to make sure you’re doing it safely to avoid any possible repercussions. The helpful advisors at Maggi Tax are here to teach you how to be smart about investing in multiple 401(k)s at the same time!
Why Would I Have More Than One 401(k)?
Many people would wonder if there’s any point in having more than one 401(k) at a time. One of the most common reasons for having multiple accounts is having more than one job that offers such incentives. Or, you could have an old 401(k) from a past employer along with an active account with your current employer. In either case, it’s absolutely legal to contribute to more than one. You just need to keep certain rules and limitations in mind while you’re investing.
How To Contribute To Your Accounts Safely
Contributing to multiple retirement funds is a great way to get the most money by the end of your career, but this is one instance where dumping as much as you can into every account isn’t always the best way to go about it. Take a moment to consider these important factors:
Watch Out For Deferral Limits!
When it comes to 401(k)s, there’s a deferral limit that determines how much you can invest before your contributions no longer become eligible for tax deductions. But what does this mean for multiple accounts? As far as 401(k)s go, all of your accounts share a collective limit. So however much you decide to contribute to one account, it will affect how much you have left to contribute to your other account. The IRS sets a specified limit each tax year, so it’s worth it to stay up to date.
Do Employer Contributions Count?
As is the case with employer-based 401(k) accounts, your employer may match the amount that you choose to contribute. Thankfully, their contributions do not count toward your deferral limit. You only have to worry about keeping track of your own personal contributions.
Having An IRA Account In The Mix
Some people may choose to open up a separate IRA or Roth IRA account aside from their existing 401(k)s. The good news is IRAs go by a different deferral limit that has absolutely no effect on your 401(k) limit. The only thing you may have to watch out for is the possibility that you might not be able to write your IRA as tax deductible if you also have an existing 401(k).
Need Assistance Managing Your Retirement Accounts? Maggi Tax Can Help!
If you want to capitalize on investing in your retirement but this information is a lot to take in, allow Maggi Tax to assist you! We specialize in personalized retirement plans that are catered to your income and spending to invest in a way that’s safer and more doable for you. Call (727) 799-1701 today to schedule a complimentary consultation!