For individuals with multiple income streams, such as physicians, small business owners, startup founders, entrepreneurs, and consultants in tech or other fields, it’s possible to exceed the IRS’s annual limit for tax-deferred retirement savings. In 2024, this limit is $69,000 for combined employee and employer contributions, increasing to $70,000 in 2025. This article outlines strategies to maximize retirement savings through separate jobs, self-employment, and consulting work.
Understanding the Rules
Before diving into strategies, it’s essential to understand two key rules that govern tax-deferred retirement contributions:
Rule 1: Total Employee Contributions
The IRS imposes a combined annual limit on employee contributions across all retirement accounts, including:
- 401(k) — including Roth 401(k)
- 403(b)
- Solo 401(k)
For 2024, the total employee contribution limit is $23,000 ($30,000 if you’re 50 or older, which includes a $7,000 catch-up contribution). This cap applies regardless of how many accounts you have and how many jobs you hold.
Rule 2: Job-Specific Contribution Limits
Each employer or job has a separate annual limit for combined employee and employer contributions:
- $69,000 per job in 2024 (rising to $70,000 in 2025)
- $73,500 per job if you’re 50 or older (includes the $7,000 catch-up contribution)
Maximizing Retirement Savings with Multiple Jobs
To exceed the typical $69,000 limit, consider these strategies:
1. Multiple Regular Salary Jobs
If you hold multiple salary jobs, each offering its own 401(k) or 403(b), you can maximize contributions across plans. While your employee contribution limit ($23,000) applies across all plans, each employer’s matching contribution remains separate. For example, you should always try to make your necessary contributions to first reach the maximum employer match first. If all of these contributions still not exceed the annual $23,000 limit, you then can consider to contribute more in these plans to get more tax savings. However, getting the maximum employer match should be always the highest priority .
Example:
| Job | Employee Contribution | Employer Match | Total Contribution |
|---|---|---|---|
| Job 1 | $23,000 | $46,000 | $69,000 |
| Job 2 | $23,000 | $46,000 | $69,000 |
| Total | $46,000 | $92,000 | $138,000 |
2. Self-Employment (Including Solo 401(k))
If you’re self-employed, you can set up a Solo 401(k) or SEP IRA. Contributions include both employee deferrals and employer contributions (up to 20% of net earnings). However, keep in mind that all self-employed income is treated as coming from one employer—yourself. This means the $69,000 annual limit applies collectively to all self-employment income, regardless of the number of clients or projects.
Example:
| Self-Employment | Employee Contribution | Employer Contribution | Total Contribution |
|---|---|---|---|
| Self-Employment | $23,000 | $46,000 | $69,000 |
3. Consulting/Contract Work Across Multiple LLCs or Firms
Providing consulting services to multiple LLCs or Firms (where each is legally distinct and files its own tax return) creates opportunities for additional retirement contributions. Each LLC can establish a separate SEP IRA or similar plan. This strategy is not applicable if all consulting work is performed under a sole proprietorship, where all income is considered from a single employer—you.
The other important rule is the so-called Controlled Group Rules: If multiple businesses are under common control from you (i.e., you own a significant portion or control multiple entities), retirement contributions are aggregated. Even if you operate in multiple consulting roles, income from businesses you control will count toward a single retirement plan limit. Simply put, if you work in multiple LLCs that you can be classified as a controlling owner, your work should be treated under sole proprietorship category, thus the tax-deferred contributions (including the employer matches) should be all under a single $69,000 annual limit. This is a complicated area in which we advise you to take a safer or conservative route, i.e. don’t exceed the single total $69,000 annual limit for these jobs.
Example:
| LLC | Employee Contribution | Employer Contribution | Total Contribution |
|---|---|---|---|
| LLC 1 | $23,000 | $50,000 | $73,000 |
| LLC 2 | $23,000 | $40,000 | $63,000 |
| LLC 3 | $23,000 | $45,000 | $68,000 |
| Total | $69,000 | $135,000 | $204,000 |
Key Reminder: If all your consulting work is conducted under a sole proprietorship, the IRS treats it as a single “employer,” meaning your total contributions across all consulting income cannot exceed $69,000.
Important Considerations
While pursuing these strategies, keep the following in mind:
- Administrative Complexity: Managing multiple retirement accounts requires careful record-keeping and compliance with IRS regulations.
- Fees and Expenses: Some retirement plans may come with higher administrative costs.
- Tax Implications: Contributions to various plans can have nuanced tax consequences. Consult a tax professional to ensure compliance and optimize tax benefits.
Summary
Maximizing tax-deferred retirement savings beyond the $69,000 ($70,000 for 2025) limit requires a proactive approach and thorough understanding of IRS rules. By diversifying income streams and leveraging multiple legitimateemployers, you can significantly boost your retirement nest egg.
However, for sole proprietors or self-employed individuals, the IRS considers all consulting or self-employment income under one umbrella. It’s essential to plan within these constraints to avoid penalties and optimize savings.
As always, consult with a financial advisor or tax professional for the complicated situations mentioned above.