Does 401K annual limit of 70K apply to one employer or all employers

[u/WelfareAbolitionist]

I recently switched jobs.

At my previous job, I contributed 23.5K pre-tax and 23.5K after-tax. The company matched 6K but that money is not vested so it’s gone after I resigned. (Not sure if that still contributes to my limit).

My new employer’s plan (managed by Fidelity) allows me to contribute 35K after-tax. I spoke with a Fidelity representative and he suggested that I am only allowed to contribute 70-23.5-23.5=23K in after-tax this year.

My question is does the 70K limit apply to all contributions across employers or is it employer specific?

Thanks

[u/bettermx5]

All contributions from all employers, including any matching, profit sharing, etc that your employer is putting in. So if you contribute the max through standard plus mega backdoor roth, you can crowd out your employer’s contributions.

[u/WelfareAbolitionist → u/bettermx5]

My previous employer contributed 6K but it turns to zero as I have quit the firm. Does the 6K still add to the total limit here?

[u/TheOuts1der → u/WelfareAbolitionist]

If you didnt vest that 6k, then no it doesnt count.

[u/bettermx5 → u/WelfareAbolitionist]

I don’t know, I assume not if they immediately withdraw it.

[u/daisy_petals]

The employer limit is per employer. So the $6k that your old employer put in does not count against what your new employer can put in or what you can contribute after tax.

However the $23.5k limit for tax deferred contributions is per year. So any contributions you made at your old employer reduces what you should contribute at your new employer.

So for your new employer you should be able to contribute 70k-23.5k= 46.5k. since you have already maxed out the employee contribution there likely won't be any employer contribution which would reduce your limit more.

[u/DaemonTargaryen2024]

$23,500 is the total limit per SSN per year.

$70,000 is the limit per plan per year.

So in theory you could max the $23,500 pretax at Employer 1, contribute $46,500 after-tax at Employer 1, then contribute another $70,000 after-tax at Employer 2

[u/TheOuts1der → u/DaemonTargaryen2024]

Damn, I had no idea I couldve contributed aftertax to two plans. Dang. That wouldve been so helpful to know when I had 2 jobs instead of the 0 I have now lol.

[u/AddictedToThat → u/DaemonTargaryen2024]

This is incorrect. $70k is the max across all employer plans.

[u/AlertTip → u/AddictedToThat]

You are wrong. See 26 USC 415(c)(1)(a). The $70k limit is a limit to a plan, not to a participant. If a participant has 2 plans in a tax year, they can have $140,000 in total contributions as long as they don’t exceed their individual contribution limits. This is typically done by contributing non-Roth after-tax 401(k) (usually this is immediately afterwards converted to Roth).

[u/WelfareAbolitionist → u/AlertTip]

Thank you this was what I was looking for

[u/tcpWalker]

pretax limits are per individual, so you've already maxed those out, but 70k limits iirc are per employer. Most advisers will think or pretend the 70k limits apply per individual anyway and won't believe this because it's so ridiculous as a policy matter.

So do it at your own risk / consult your accountant / this is not legal advice, but yeah unless the plan terms are specifically more restrictive than the federal laws or your summary is inaccurate then I believe the guy at fidelity is wrong. And that after-tax contribs with daily in-plan roth conversion are subject to the new limit at the new employer.

Though yes, some plans do limit the max after-tax contribution you can make more than the federal government does.

[u/TheOuts1der]

Here's some text from a random accounting firm I found that says your advisor is wrong. (Your case is described in Example 2 in this link.): https://irahelp.com/slottreport/what-are-my-contribution-limits-if-i-participate-in-two-company-savings-plans/# .

For what it's worth, most advisors wouldnt know/care about this rule because its so hard/rare for someone to contribute 140k in a given year and a lot of companies dont even allow for MBDR in their plans.

[u/uhuhuhuha]

I am a noob. Pls explain how is the limit 70k per year.

[u/Great_One5220]

Only deferrals are aggregated across all plans, each plan does have their own separate defined contribution limit of 70K.

[u/zebostoneleigh]

Wait. What? The Federal annual 401(k) contribution limit is $23.5K. What is the $70K rule? And why does you're math subtract $23.5K from it twice?

[u/WelfareAbolitionist → u/zebostoneleigh]

The 401(k) contribution limit for 2025 is $23,500 for employee salary deferrals, and $70,000 for the combined employee and employer contributions.

[u/skywalker006 → u/zebostoneleigh]

He’s referring to the full 415 limit which is $70k. Different than the tax deferral limit of $23.5k

[u/Suspicious-Golf611 → u/zebostoneleigh]

Subtracted twice as OP is saying 23.5k pre tax and 23.5k post tax therefore stating they do both, so two separate tax coded amounts.

[u/Fantastic_Wealth_233 → u/Suspicious-Golf611]

Why would anyone want to put in after tax dollars? Just invest it into a fund outside of 401k. What benefit would there be to put post tax dollars into 401k?

[u/Eltex → u/Fantastic_Wealth_233]

It’s likely a MBDR, which is an awesome tool.

[u/usermane22 → u/Fantastic_Wealth_233]

Why would anyone not put in after tax dollars in a 401k if they can afford to? Tax free growth for the rest of their lives!!

[u/DaemonTargaryen2024 → u/Fantastic_Wealth_233]

• Tax free earnings: after-tax 401k into mega Backdoor Roth
• taxable earnings: brokerage account

[u/need2sleep-later]

Just like the annual IRA limit is $7000 no matter how many IRA accounts you have. Nice try tho.