Many physicians manage multiple 401(k) accounts due to employment by various employers or engagement in independent contracting. With the increase in contribution limits—rising from $51,000 to $72,000 by 2026—doctors often seek to maximize their retirement savings, especially using tax-deferred accounts that provide financial benefits such as tax minimization and asset protection.
Despite the misconception that only one 401(k) per person exists, it is permissible to have numerous accounts, provided the employers are considered unrelated. Critical rules apply when utilizing these accounts. For instance, the total employee contribution across all 401(k)s is capped at $24,500 for 2026, with higher limits available for those aged 50 and above. Furthermore, combined contributions (employee plus employer) from unrelated employers can reach $72,000, allowing physicians to potentially double this limit across different jobs.
Additionally, catch-up contributions for individuals over 50 can further amplify retirement savings. As rules governing these accounts can be complex, especially concerning employer contributions and the interaction with other retirement accounts like IRAs and HSAs, clarity is essential. Those in unrelated jobs can exploit this system to significantly enhance their retirement portfolios.
Misunderstandings frequently arise among accountants and clients about the allocation of contributions, emphasizing the need for informed financial planning.
Why this story matters: Understanding retirement account rules can significantly impact financial security for those with multiple income sources.
Key takeaway: Physicians can maximize retirement contributions across multiple 401(k) accounts as long as employers are unrelated and account limits are adhered to.
Opposing viewpoint: Some financial experts caution that managing multiple accounts can complicate investments and benefits tracking, potentially leading to mismanagement.
