For many owners, contributing the maximum amount to a retirement plan is not as simple as looking up the IRS contribution limits. For some owners with multiple businesses and/or multiple retirement plans, it can become confusing to understand which accounts to fund before the end of the year (or after the year). While saving into retirement accounts can be helpful long-term, chances are some of us would save even more into these accounts if we properly understood the rules that apply to us. Here are 5 questions to ask yourself (or your accountant) to see if you qualify to contribute:
Key Takeaways
- Understand how many and which retirement plans you can use: A single business generally can’t have multiple active retirement plans at once, but individuals with unrelated jobs or side businesses may legally contribute to more than one plan (e.g., a workplace 401k plus a Solo 401(k) or SEP IRA).
- Track contribution limits carefully, especially if plans change: Annual employee contribution limits apply across all 401k plans combined, even if you switch jobs or plans mid-year. Changing or closing plans requires advance planning and coordination with an accountant.
- Don’t forget IRAs: Even if you contribute through a company plan, you may still be eligible to contribute up to $7,000 to a Traditional or Roth IRA per person, though income limits and deduction rules can affect eligibility.
- Take advantage of catch-up contributions if eligible: Individuals age 50+ (and especially those 60–63) can contribute extra amounts to 401ks, IRAs, and SIMPLE IRAs.
1. Do you have multiple retirement plans in the same company?
In most situations, one individual company cannot technically have more than one active retirement plan. An owner can certainly have multiple “unrelated” businesses with a retirement plan in each, but one specific business cannot open a dozen 401k plans to contribute to. If your business has a SEP IRA and a 401k, for example, check with your accountant to find out which is better for your situation, and close the other. There are some exceptions (457 plans, ESOPs), but that is beyond the scope of most small business owners.
2. How many retirement plans do you have access to?
The more retirement plans you have access to, the more you potentially can contribute. The most common example is likely a full-time employee who has a side business as well. If the side business is unrelated to the day job, an extra retirement plan is a great way to boost retirement contributions.
Using 401k plans, for example, employees could max out the employee side of their 401k and also contribute to a Solo 401k (on the employer side) or a SEP IRA through the side business. As long as the businesses are unrelated and there is enough income generated to satisfy the contribution rules of each plan, it could be beneficial to contribute to both or multiple plans in the same year.
3. Did you switch retirement plans throughout the year?
Many employees who go independent to start their own company may have to pay attention to their contributions for the year. The 401k rules limit employee contributions to $23,500 for 2025, regardless of the plan in which the contributions are made. It is important to understand how much was contributed before starting any employee contributions to a new 401k. Under the right circumstances, there may be ways to still contribute via employer contributions (like a Solo 401k or after-tax contributions), so work with your accountant to see how much room you have left.
Switching plans could also apply to a business that simply changed the active retirement plan (successfully from question 1). Closing a SEP IRA to open a SIMPLE IRA, for example, can come with its challenges in terms of when to open and contribute to each account. Generally, these plans for small businesses are calendar-based, so for 2025, a company could have an active SEP IRA but switch to a Simple IRA starting 1/1/2026. Usually, switching requires more planning to execute and generally starts months before the end of the year.
4. Can you contribute to Individual Retirement Accounts as well?
After all the dust settles for your company retirement plan contributions, see if you can also contribute to a Traditional IRA or Roth IRA, separate from any company. Generally, with enough earned income, you can contribute up to $7,000 to either a Traditional IRA or Roth IRA in 2025. This limit is per person, so married couples could contribute $7,000 to each IRA for a total of $14,000 in 2025.
There are two important sets of rules around these contributions. First, some high-income earners could potentially lose the ability to deduct a $7,000 contribution to a Traditional IRA, especially if they have access to a retirement plan through their company. Second, the $7,000 contribution limit applies to IRA and Roth contributions. Regardless of how much is contributed to each account, contributions to both accounts cannot exceed $7,000.
5. Do you qualify for catch-up contributions?
Depending on the type of account, most retirement plans allow extra catch-up contributions, depending on your age. IRAs, for example, allow those 50 and older to contribute an extra $1,000 in 2025. 401k plans are even more generous, allowing up to an additional $7,500 towards the $23,500 employee contribution limit for 2025. Recent changes have also allowed people age 60-63 to contribute an extra catch-up, if the specific plan allows it. For 2025, those in their early 60s can contribute an additional $11,250 instead of the normal $7,500 catch-up.
Simple IRAs allow this extra catch-up provision as well. For 2025, Simple IRA employee contributions max out at $16,500. Those over 50 can put in an extra $3,500, unless you are 60-63, then you can contribute an extra $5,250. Simple IRA plans also now allow additional contributions depending on the number of employees in the company, so check with your accountant to see if this applies to you.
Retirement Contributions
Attempting to contribute to retirement accounts can be a great step towards saving for retirement, as well as reducing the tax burden this year. However, business usually makes things complicated, and retirement plans are no exception. Make sure to understand all the different plans you have access to, and whether they are all in compliance. Work with your professional team to understand which accounts you can contribute to and the maximum amount in each. Doing so can help you step back and look at your options objectively for year-end retirement contributions for 2025.
TC Falkner 