Expert: Allen - 10/27/2009

Question
Let's just say in the same calendar year, a person has two jobs (not simultaneously -- one in the first part of the year and the newer job in the latter part of the same year).  If that employee maxxes out their SIMPLE IRA at the first job and then goes to the new job and wants to participate in that company's 401K, that leads to these questions:  1) first off, can they even participate (since they maxxed out the SIMPLE earlier)?; and 2) if they can participate, can they max out the 401K or are there limits for that remaining part of the calendar year (assuming they fall UNDER the AGI limits)?  Thanks.  Richard

Answer
Sorry for the delay in getting back to you.

You only have one limit and that's $16,500 in 2009 (or $22,000 if you were born before January 1, 1960). The amount you can contribute to the 401(k) is this amount less any contributions to the SIMPLE. So if you are less than 50 years old and contributed $11,500 to the SIMPLE, your 401(k) contribution is limited to $4,000.

For more details go to IRS Publication 525.