Do you have any other retirement accounts in 2020? Although plans may set lower deferral limits, the most you can contribute to a plan under tax law rules is the lesser of:
- the allowed amount for that plan type for the year, or
- 100% of your eligible compensation defined by plan terms (includible compensation for 403(b) and 457(b) plans).
If you’re self-employed, generally your compensation is your net earnings from self-employment (see Calculating Your Own Retirement Plan Contribution and Deduction).
Example
You are 52 years old and participate in a 401(k) plan with Company #1 and a SIMPLE IRA plan with an unrelated employer Company #2. You receive $10,000 in compensation in 2020 from Company #1 and another $10,000 from Company #2. You can’t defer more than $10,000 to either plan (for example, $12,000 to the 401(k) plan and $8,000 to the SIMPLE IRA plan) because your deferrals to each employer’s plan can’t exceed 100% of your compensation from that employer.
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